“One crisis was enough,” said Juncker. “After the toughest management of the Greece crisis, we have to do everything to avoid a new Greece–this time an Italy–crisis.”
Related: Italy Troubles Keep Pressure on Euro ETFs
Italian bonds have faced mounting pressure the last few months since the anti-establishment coalition of the right-wing League and the 5-Star Movement took over office in June. During a meeting with Italian prime minister Giuseppe Conte last month, US President Donald Trump purportedly offered Italy assistance in buying the country’s sovereign bonds next year in the face of the country’s distressed financial health, which could have ripple effect implications to the rest of the Eurozone.
Last year, Italy recorded a government debt equal to more than 130% of the country’s gross domestic product, but has struggled to keep its repayments under control. There are no specifics as to how President Trump would implement this bond purchase if the Italian government agreed.
“There’s been a lot of noise around Italy, but I think the key question to focus on is not the rounding around the budget numbers that they are predicting or forecasting, but more this perception of whether the relationship with Europe is cooperative or whether it is disruptive,” said George Saravelos, global co-head of FX research at Deutsche Bank.
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