New Central Bank Interest Rates And Bail-In Laws Had Plunged Bank Stocks

On Monday, global stocks saw a huge bout of panic selling on Monday as new laws and interest rates by central banks threatened the health of the world's banking system since the financial crisis.

The new rates had seen European markets slump to very low levels in two years. The generally gloomy outlook for the world economy and the endurance of the world's biggest lenders will be tested in the following months of 2016.

TheEuro Stoxx 600 index had fallen by 6 per cent in Monday's trading and closed at 5.6 per cent. Europe had lost about 17.3 per cent of their value in the previous month.

The high instability of stocks had forced Barclays shares to be suspended by the late afternoon trading. Barclays, BNP Paribas and ING Santander dropped by 5 per cent upon market closing.

Deutsche Bank fell to 11.8 per cent and closed at 9.5 per cent on Monday. It had also seen an estimated 40 per cent of its market capitalisation wiped off during the start of the year.

Meanwhile, Japan is struggling with its negative interest rates, joining Denmark, Sweden and Switzerland.

According to CMC Markets' Jasper Lawler:

"Investors have significantly reassessed the chance of an earnings turnaround after years of regulatory fines for past misdeeds."

Due to a weak Chinese economy, a strengthening US dollar and low global growth, experts generally expect 2016 to be turbulent.