Bank of Italy cites low growth, high public debt as biggest risks
Seeking Alpha
Published Nov 23, 2018 12:43PM ET
Bank of Italy cites low growth, high public debt as biggest risks
- Italy's central bank sounds the alarm that low growth and high public debt present the most risk to Italy's financial stability.
- Uncertainty over economic and fiscal policy has caused yields on public sector securities to rise sharply, also due to fears of a hypothetical redenomination of debt into currency other than the euro.
- "In the banking sector credit quality has continued to improve as has profitability," the Bank of Italy says in its financial stability report. "Tensions in the sovereign debt market have nonetheless led to a deterioration in liquidity and capital adequacy indicators and to an increase in market risks."
- Insurance sector is especially vulnerable to sovereign risk, the report says.
- Solvency ratios, on average, are well above minimum requirements even though they've experienced a significant reduction. "Further large drops in the prices of government securities could have significant effects on the solvency position of insurers," the reports says.
- Italy's 10-year government bond yield recedes 2.7 basis points to 3.415%.
- Previously: EU opens disciplinary procedures against Italy (Nov. 21)
- Related tickers: OTCPK:UNCFF, OTCPK:IITOF, OTCPK:ARZGF, OTCPK:UNCFY, ISPNY, OTCPK:IITSF, OTC:MDIBF
- ETFs: EWI, HEWI, DBIT, FLIY
- Now read: Your Italian, Queen Like Espresso Cup For This Morning
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