The two major concerns for the euro zone: Italy and banks

Since the start of 2018 there has been a weakening of euro-zone financial markets and the euro exchange rate. This weakening is after all a logical reaction to the two main sources of concern for the euro zone: the situation of Italy and the situation of banks: Italy is trapped in a vicious circle: low growth leads to an upward revision of expectations concern i ng the fiscal deficit, resulting in a rise in interest rates which harms its growth prospects and fiscal solvency; Euro-zone banks are affected by the persistence of a flat yield curve, the worsening situation of Italian banks due to their holdings of Italian government bonds , the prospect of a growth slowdown, and persistently low profitability despite renewed growth.