Report
Patrick Artus

How can a euro-zone crisis originating in Italy be prevented in the future?

The very low interest rates implemented by the ECB (almost) ensure Italy’s fiscal solvency, prevent a fresh public debt crisis in Italy and therefore safeguard the euro zone ’s integrity . This is a form of solidarity in the euro zone in favour of Italy. But it is very difficult to believe that the ECB will maintain the current policy of zero or negative interest rates forever: the drawbacks of this policy (real estate bubble, weakening of banks and life insurance companies, heavy taxation of savers) should eventually lead to a normalisation of euro interest rates. How can the rise in interest rates be prevented from triggering a debt crisis in Italy and a crisis in the euro zone? Via a very restrictive fiscal policy in Italy? But this is rejected by the government and public opinion; Via solidarity between euro-zone countries and Italy to help it finance the necessary investments (education, research, infrastructure, corporate modernisation, etc.)? But this solidarity is rejected by the Northern euro-zone countries, which believe that Italy must solve its domestic problems by itself and reform its economy.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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