source: Merrill Lynch

"With financial institutions in Europe linked to the rating of the sovereign issuer where they are located, and the June 17th Greek election turning into a "referendum on the euro", Europe is now facing the increased possibility of a full blown banking crisis. The only way to stop this vicious circle for the euro would seem to be the creation of a backstop for all systemically important Eurozone financial institutions at the taxpayer level. Given the nearly $40tn of bank assets in the Eurozone, a quick compromise will be hard to reach, in our view. Meanwhile, deflationary pressures in the Eurozone are building up fast. As contagion spreads from banking woes to economic growth expectations, oil prices are falling rapidly." Global Commodity Research at Bank of America Merrill Lynch.