Trouble Ahead for the Eurozone's Banks

The European Central Bank announced April 7 that it was raising interest rates a quarter percent, to 1.25 percent, effective April 13. The move indicates that the central bank is ending its accommodative monetary policy, enacted to keep the eurozone's financial sector from collapsing in the crisis of 2008. However, the move will negatively affect the eurozone's banks, which still have basic structural problems. Furthermore, Germany's reluctance to reform its own banking system is sure to affect the rest of the eurozone.