Regulators should impose a cap on the amount banks can lend to an individual sovereign in an effort to give them "greater protection against distressed public finances", according to Andreas Dombret, an executive board member at the Deutsche Bundesbank.

Dombret told an audience at the American Academy – a research institution in Berlin – that banks are already prevented from become "overexposed" to a single borrower from the private sector. "This makes them less vulnerable to the default of that