Italy’s teetering banks will be Europe’s next crisis

Italy’s teetering banks will be Europe’s next crisis

  • But in Italy, thanks in part to a quirk of the tax code, some €200 billion of bank bonds are held by retail investors.
  • The market pressure on Italy’s banks will not ease until some confidence is restored, and that will not happen without public funds.
  • New euro-zone rules say banks cannot be bailed out by the state unless their bondholders take losses first.
  • Shares in Italy’s biggest banks have fallen by as much as half since April, a sell-off that has intensified since the Brexit vote.
  • To give the European bail-in directive a greater chance of being implemented in future, it should be changed so that retail investors who already hold bank bonds are explicitly shielded.

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@jessefelder: “Italy’s teetering banks will be Europe’s next crisis”


Italy’s teetering banks will be Europe’s next crisis


Italy’s teetering banks will be Europe’s next crisis