Former ECB Director: Italy’s Problems Are Not Economic And Far From Over

Although market fears of an Italian contagion effect are now largely subdued, one strategist said that much uncertainty lies ahead. Speaking from Brussels, Francesco Papadia, fellow of the Bruegel Institute and former market operations director of the European Central Bank told Kitco News that he remains sceptical if the new government can stay on course. 

“For the time being, things have calmed down, but I would not say that we are out of the woods as yet, because we want to see whether this new government will comply with its electoral promises, which of course, cannot be implemented without big problems on the fiscal side,” he said. 

Papadia said that should Italy’s debt burdens spiral out of hand, the ECB will not be in a position to come to assistance. “Let me be very clear on this, the ECB cannot do anything for Italy in particular, so I don’t think that the ECB could come in and solve Italian problems,” Papadia said. “Italian problems are not economic problems currently.”

- Source, Kitco News