With the French presidential contest out of the way, market concerns around political risk in Europe have dissipated, the Financial Times reported. Enjoying the best macroeconomic environment since the crisis, Europe may be at the onset of a few golden years. But the global financial crisis left a legacy of high debts and bad loans clogging bank balance sheets in several countries, among which Italy is the largest. These problems risk spoiling the party when interest rates normalise. Restoring bank balance sheets to good health would enormously reduce downside risks.

Central banking increasingly looks like an act of faith. Mario Draghi, the president of the European Central Bank, and his Bank of Japan counterpart, Haruhiko Kuroda, have spent trillions of euros and yen without generating as much inflation as they want. Yet they have little choice but to insist their policies will eventually work, the International New York Times reported in a commentary. The eurozone is finally experiencing a robust recovery and the only things lacking are a pickup in wages and inflation, Mr. Draghi said on Thursday. On the other side of the globe, Mr.

Greek assets are trading steadily this morning as investors await the International Monetary Fund’s latest verdict on its involvement in the country’s bailout programme. The IMF’s board is due to vote on an agreement between the fund’s staff and EU creditors for a precautionary cash injection should the IMF get more guarantees from Brussels on debt relief measures for Greece, the Financial Times reported.

European Central Bank head Mario Draghi is likely to tread softly on Thursday as the bank inches toward bringing an end to its monetary stimulus efforts, The New Zealand Herald reported on an Associated Press story. Analysts think it's a near-certainty that the ECB, the monetary authority for the European Union's 19-country euro currency union, will start scaling back its 60 billion euros ($69 billion) in monthly bond purchases after their earliest termination date at the end of the year.

PSA Group said on Wednesday it had reached agreement with the French government over the carmaker's contribution to a rescue plan for struggling supplier GM&S, defusing their public stand-off ahead of a key bankruptcy hearing, Reuters reported. The government also confirmed it had dropped its demands that the maker of Peugeot, Citroen and DS cars contribute a 5 million euro ($5.8 million) "modernisation" grant to the metal parts supplier on top of a 50 million euro purchasing pledge.

Germany’s financial hub is taking an early lead in attracting banking businesses in anticipation of Britain exiting the European Union, The Wall Street Journal reported. Its main asset: stability. Banks from Japan’s Nomura Holdings Inc. and Sumitomo Mitsui Financial Group Inc. to the U.S.’s Citigroup Inc. are shifting some business to Frankfurt given the possibility that the U.K. will be left out of the single market once it leaves the EU. This would prevent banks in London from being able to serve customers across the Continent, known as passporting rights.

The future securitisation of non-performing loans has been thrown into doubt by the small print of a new European law, raising concerns over the ability of the continent’s banks to shift old loans from their balance sheets, the Financial Times reported. Lawmakers in Brussels have recently negotiated a new draft regulation for the securitisation industry — a process where loans such as mortgages and credit card debt are bundled together and sold on as easily tradable bonds.

A shift in communication from policymakers in the eurozone and UK has prompted money managers to raise concerns about the threat to bond markets from any central bank missteps, the Financial Times reported. Just under half of investors surveyed by Bank of America Merrill Lynch (48 per cent) think global monetary policy has become “too stimulative” for a brightening world economy – the highest proportion since April 2011.

When EU authorities wiped out some of Banco Popular’s bonds last month, it looked as if credit default swaps might finally compensate bank debt investors for their losses with little controversy, the Financial Times reported. Credit derivatives written against the failed Spanish lender’s junior debt were triggered in a matter of days and, given that these bonds were now worthless, it seemed self-evident to many that owners of the CDS would get paid in full.

French carmaker PSA Group is resisting government demands that it raise a bailout offer to struggling supplier GM&S, ahead of a Wednesday bankruptcy hearing that may decide its fate, Reuters reported. The threat to GM&S and its 277 jobs is in the political spotlight, as a first industrial policy test for new President Emmanuel Macron's government. Finance Minister Bruno Le Maire, who took office in May, is pushing for up-front grants of 5 million euros ($5.8 million)from PSA as well as rival Renault, with a matching contribution from the French state.