The Latest: Italy bank chief warns investors could flee
MILAN вЂ” The Latest on ItalyвЂ™s political crisis (all times local):
ItalyвЂ™s central bank governor says that вЂњthe destiny of Italy is that of Europe,вЂќ as a political uncertainty threatens to drag the eurozoneвЂ™s No. 3 economy into a new crisis.
Ignazio Visco said that вЂњit is important that the voice of Italy is authoritative in contexts where the future of the European Union is decided,вЂќ referring to upcoming decisions at the EU regarding the governance of the bloc, multi-year budgets and the revision of financial rules.
ViscoвЂ™s annual address on the state of the Italian economy came as a new premier-designate of what would be a non-political government of technocrats was preparing to present his Cabinet list to ItalyвЂ™s president. Populist parties, meanwhile, are enraged that their attempts at forming a government foundered on their choice of an anti-euro economy minister.
Visco warned that investors would flee the system if they see their savings lose value because of an economic crisis, noting that вЂњforeign investors would be the quickest.вЂќ
An Italian premier-designate tapped to form a non-political government of technocrats is expected to present his Cabinet list to President Sergio Mattarella, but investors appeared dubious, sending markets plunging.
ItalyвЂ™s stock market has opened down 1.8 per cent and the spread between the Italian 10-year government bond and the benchmark German bund rose to 230 points, the highest level since October 2013, with interest rates at 2.9 per cent.
The premier-designate, former International Monetary Fund official Carlo Cottarelli, meets Mattarella to present his ministerial picks later Tuesday, two days after an attempt by two populist forces to form a government foundered on the presidentвЂ™s rejection of their anti-euro economy minister.
Facing firm opposition, CottarelliвЂ™s government is likely to fail confidence votes later in the week, pushing Italy back to elections in the fall.