Caveat: Unless the EU bailout in place (Reuters)
- Large scale emergency liquidity assistancethey also require ECV approval, could be conditional on bailout program
- OMT (outright monetary transactions) conditional on bailout program
- Italy seen as test of ECD credibility
- no appetite to help a single country
- bending rules for Italy would damage ECD
- sources highlight bank liquidity flashpoint
Italy seen borrowing costs surge since its new government unveiled plans to increase its budget deficit, in defiance of EU rules. It reawakens concerns about Italy's public debt.
EU moves to not speak to help country unless it has already agreed on a rescue program. The rescue program typically comes with fiscal belt-tightening and economic reforms. Italy has rejected that idea.
