Links with Euro area pose banking risk

Cross-border banking linkages pose a threat to the world economy, warns the 2012 World Bank Global Economic Prospects report. Banks could be forced to sell or close their off-shore operations in a worstcase scenario for the global economy. Trade flows would be affected as they are dependent on finance. “Banking sector linkages remain strong between several high-spread Euro area countries and developing countries, and their solvency also represents a risk to other European banks through various interlinkages.”