World Economy

Italy Gov’t Told to Exercise Caution

Italy Gov’t Told to Exercise CautionItaly Gov’t Told to Exercise Caution

The head of Italy’s central bank on Tuesday warned the new anti-establishment government to be cautious with public finances to avoid upsetting financial markets and increasing public debt, Reuters reported. Bank of Italy Governor Ignazio Visco told a gathering of bankers in Rome that Italy’s reform effort had petered out and that, if a new financial crisis should hit, it was now “much more vulnerable than we were 10 years ago. Prudence and far-sightedness are needed to avoid (market) tensions and to avoid leaving Italians with a higher debt and lower income in the future,” he said. Italy’s public debt, at around 132% of national output, is the highest in the eurozone after Greece’s. Visco backed a plan to pool together Italy’s small mutual banks—which the government has suggested it may suspend—saying the changes will make it easier for them to raise capital and avoid possible crises. He also called for the completion of a reform passed by the previous government forcing the larger, so-called “popolari” or cooperative banks, to become joint stock companies.

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