The 2010 sovereign crisis in the euro-area highlighted the dangers of the sovereign-bank nexus –the risk amplification effect of sovereign debt being held primarily by domestic banks. In response, important regulatory and institutional changes at the European level were put in place. Despite this, the debate on how banking regulation should account for this sovereign-bank interdependence continues today. We review the main regulatory proposals in this area and assess their impact on banks and sovereign bond markets.  […]