Italy's news in English

Editions:  Austria · Denmark · France · Germany · Italy · Norway · Spain · Sweden · Switzerland

Italy's banking woes won't cause eurozone crisis: Merkel

Share this article

Italy's banking woes won't cause eurozone crisis: Merkel
German Chancellor Angela Merkel (L) with Italian Prime Minister Matteo Renzi. Photo: Alberto Pizzoli/AFP
15:17 CEST+02:00
German Chancellor Angela Merkel voiced optimism on Tuesday that Italy will be able to head off a banking crisis and insisted the situation would not snowball into a new eurozone emergency.

"Intensive discussions are ongoing between the Italian government and the European Commission and I am convinced that the questions that are being discussed will be resolved," Merkel said at a joint press conference with Irish Prime Minister Enda Kenny.
   
"I do not see a crisis developing in a general sense," she added.
   
Fears are rife on the financial markets that Italy could reignite the eurozone debt crisis if it fails to tackle the €360 billion ($398 billion) in bad debt sitting in its national banks.

Markets have turned sour on several Italian banks, most notably Italy's number-three lender and the world's oldest bank, Banca Monte Paschi.

The bad debt predicament poses political as well as economic difficulties for Prime Minister Matteo Renzi, who must obey new eurozone rules which limit a bailout of banks using public money unless investors shoulder bear part of the burden.
 
 A huge bad debt burden is also poison for the economy as it restricts the amount of money that banks can lend to businesses, thus holding back growth.
   
The Italian economy has been ticking along with tepid if any growth the past few years, failing to recover much ground lost following the global economic and eurozone crises.

 
Get notified about breaking news on The Local

Share this article

The Local is not responsible for content posted by users.
Become a Member or sign-in to leave a comment.

From our sponsors

This cloud-based agency takes remote working to the next level

Be honest, who hasn't dreamed of working remotely with all the perks of employment? If you've got the skills, you only need to look UP to make that dream a reality.