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ECB warns Italy over huge debt
Source: Bloomberg News |
September 5, 2011, Monday
|
Print Edition
Print Edition
EUROPEAN Central Bank President Jean-Claude Trichet has kept up warnings over Italy's strained public finances, telling the struggling government it must act quickly to reassure nervous markets.
Italian Prime Minister Silvio Berlusconi, hit by a new scandal last week, has caused growing alarm over the failure of his divided government to pass measures to trim Italy's 1.9 trillion euro (US$2.7 trillion) debt mountain.
Speaking last Saturday after steadily rising market pressure on Italian bonds, Trichet repeated that the government had to meet last month's pledge of a clear plan to balance the budget by 2013 and pass reforms to boost Italy's stagnant economy.
"This is absolutely decisive to consolidate and reinforce the quality and the credibility of the Italian strategy and its creditworthiness," he said in the northern Italian town of Cernobbio.
The European Central Bank, which has been buying Italy's bonds in the market to hold down yields and stop its borrowing costs spiralling out of control, has been stepping up warnings that Rome must act quickly.
There has been some speculation that it might cut its bond purchases to put pressure on Rome to act more quickly to pass a much disputed 45.5 billion-euro package of austerity measures now going through parliament.
However, any sign of the ECB cutting back its bond-buying programme would risk triggering a market selloff.
Italian Prime Minister Silvio Berlusconi, hit by a new scandal last week, has caused growing alarm over the failure of his divided government to pass measures to trim Italy's 1.9 trillion euro (US$2.7 trillion) debt mountain.
Speaking last Saturday after steadily rising market pressure on Italian bonds, Trichet repeated that the government had to meet last month's pledge of a clear plan to balance the budget by 2013 and pass reforms to boost Italy's stagnant economy.
"This is absolutely decisive to consolidate and reinforce the quality and the credibility of the Italian strategy and its creditworthiness," he said in the northern Italian town of Cernobbio.
The European Central Bank, which has been buying Italy's bonds in the market to hold down yields and stop its borrowing costs spiralling out of control, has been stepping up warnings that Rome must act quickly.
There has been some speculation that it might cut its bond purchases to put pressure on Rome to act more quickly to pass a much disputed 45.5 billion-euro package of austerity measures now going through parliament.
However, any sign of the ECB cutting back its bond-buying programme would risk triggering a market selloff.
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