The article discusses how the euro-area banking and sovereign crises are closely linked. Euro-area countries had large amounts of domestic government bonds held by their banks at the start of the crisis, leading to concerns about both sovereign solvency and bank stability. Countries facing solvency issues saw a decrease in the share of government debt held by non-residents, while Germany saw an increase. This raises questions about the effectiveness of ECB liquidity provision to banks and the need to reduce banks' heavy exposure to sovereign debt in the long term.