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The populist backlash across the euro-area is gathering momentum. Italy is headed for elections that may give populist parties more power and there is a no-confidence vote planned in Spain.
The FT reports that the Bank of Italy has warned the Italian government that it may be losing the trust of markets.
The governor of the Bank of Italy has warned that the country was “a few short steps away” from losing the “asset of trust”, a rare intervention by the central bank into a political crisis that underlined the risk Rome faces as it stumbles to new elections.
Ignazio Visco said any new government must respect EU treaties that bind eurozone countries into strict debt and deficit limits, a clear criticism of the two large populist parties that are leading in opinion polls and which recently called into question the Brussels-managed strictures.
“The rules of the game can be debated, even criticised; they can surely be improved,” Mr Visco said in an annual speech on the state of the Italian economic and financial system. “Yet, we cannot disregard constitutional constraints: protecting savings, balancing the accounts and respecting the treaties.”
Full article can be read here.
Jeremy Jones, CFA
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