(MENAFN- AFP) The European Central Bank rejected a media report Monday which said its president Mario Draghi blocked proposals to change the risk weighting of government bonds held by European banks.
Currently, government bonds enjoy a privileged, risk-free regulatory status at banks, and do not require capital provisions.
Critics -- including ECB governing council member and Bundesbank chief Jens Weidmann -- say such an arrangement only reinforces ties between weak banks and indebted governments.
According to the weekly magazine Der Spiegel, the committee has proposed that risks should, similar to corporate bonds, be limited or anchored with capital in banks' balance sheets, the magazine said.
But the magazine goes on to report that Draghi has asked for a revision of proposals and asked them to be "reworked", which the ECB denied.
"The president of the ECB in his capacity as chair of the European Systemic Risk Board (ESRB) did not block proposals to change the risk weighting of government bonds held by financial institutions," an ECB spokesman said.
The ECB is set to conduct asset assessments and stress tests on banks ahead of becoming the region's banking supervisor in November 2014.
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