Renzi Says Will Veto Efforts to Cap Holdings
World Economy

Renzi Says Will Veto Efforts to Cap Holdings

A drive to tighten rules over how much sovereign debt banks are allowed to own has raised the alarm in the home of the euro region’s largest bond market.
Italy’s prime minister, Matteo Renzi, vowed last month to veto any attempt to cap holdings, putting him at odds with Germany. Italian government securities account for 10.4% of the country’s bank assets, the most among major European economies and compared with 3.2% in Germany, the latest European Central Bank figures show, Reuters reported.
A limit would mean “altering the balance of the Italian banking system,” said Francesco Boccia, a lawmaker from Renzi’s Democratic Party who heads the budget committee in Italy’s lower house of parliament. “Banks are already struggling to lend money to small- and medium-sized companies,” he said. “This would be the final blow.”
In essence, the eurozone’s biggest debtor is on a collision course with its biggest paymaster over how to fix the failures of the past.
Having financial institutions willing to finance the government is vital to most countries, especially in Italy. The country has outstanding debt of €2.17 trillion ($2.36 trillion), more than anywhere else in Europe. It amounts to 133% of its economic output, the largest ratio except for Greece.
The problem in Berlin is that it highlights Europe’s “doom loop,” the too-tight connection between sovereigns and their lenders that fueled the debt crisis and landed Germany with the biggest bill. Chancellor Angela Merkel’s government has been leading the campaign to tackle the practice of banks treating the debt as risk-free.
Germany has resisted moving toward closer financial ties, including initiatives such as a common eurozone deposit insurance system, until progress is made on reducing risk.


Short URL : http://goo.gl/fmCmdC
  1. http://goo.gl/BFVfOP
  • http://goo.gl/Sq8txA

You can also read ...

More and more Thai merchants are integrating WeChat Pay and Alipay’s systems to cater to tourists.
The internet has changed the way most people live. Through...
Cambodia’s economic outlook remains positive, but is subject to downside risks.
The IMF Managing Director Christine Lagarde expressed optimism...
More India Bank Frauds Revealed
Over 25,800 fraud cases involving about Rs179 crore ($1.79...
Qatar Calls to Investigate UAE Bank’s Bogus Deals
Qatar has asked US regulators to investigate the US subsidiary...
Free trade achieves more good for the planet.
US President Donald Trump’s steel tariffs have brought the...
Morocco Currency Reform on Right Track
Few weeks after the launch of the gradual dirham float, the...
EU Readies Tax on US Technological Titans
The European Union will next week unveil plans for a digital...
Apparel imports from ASEAN are growing, spurred by low labor costs  in such countries as Vietnam.
Import prices for apparel and daily goods in Japan plunged...