If markets determine a 2.5-percentage-point spread for sovereign debt security yields above Germany's and they are one point higher than those issued by Spain, it spills into private credit mechanisms and reduces the capacity to grow the national economy, said Ignazio Visco, governor of the Bank of Italy. Speaking on Saturday in Venice, he warned the country's government again of the repercussions resulting from economic uncertainty and said it mustn't pursue "harmful objectives."
The spread measures the risk that debt wouldn't be repaid and fears rise if there is indication Italy would leave the Eurozone, the rate-setter stressed, but also acknowledged he estimates the danger of default is zero. "It takes trust and programming skills. You can't live under the nightmare of a deficit that doesn't support the demand for market stability," he stated.
The cabinet of Prime Minister Giuseppe Conte must reassure investors, meet fiscal targets and emphasize the ability to boost gross domestic product via public-private projects, according to the member of the European Central Bank's Governing Council.
