Zingales on the Risk Italian Banks Pose to the EU

The video discusses the disparity between market expectations and the EU's ability to resolve financial issues, highlighting potential disruptions in Italy and the broader EU. It examines the Italian banking crisis, using the Bank of Napoli as a case study, and critiques the asset management strategies employed. The discussion shifts to the challenges faced by European banks due to monetary policy, particularly the ECB's negative interest rates, and the resulting credit crunch. Finally, it addresses the reluctance of equity holders to dilute shares and the lack of political will for government intervention in recapitalization efforts.

What challenges do European banks face in terms of recapitalization according to the discussion?

What role does the government play in the recapitalization of banks during a crisis, based on the text?