Euro is choppy this morning, after a downturn yesterday following poor economic releases. While largely expected by the markets, the drop in GDP growth is not a good sign – and year-on-year industrial production figures came in lower than forecast, at -2.6% over -1.2%.
With the Italian political and budgetary crisis on a standstill until August 20th, when the President will appear before the Senate, commentators are turning their attention again to speculation of a potential introduction of ‘bills of treasury’, should Salvini become Prime Minister. They could be used by the Italian government to pay of small portions of its mounting debt, effectively creating an ‘alternative currency’ in circulation. University of Pavia economist Riccardo Puglisi has said that it could result in being ‘a way to facilitate the exit of Italy from the eurozone.’
With a debt to GDP ratio that’s in the top five in the world, any instability in Italy can have a significant impact throughout the eurozone, particularly in countries like France, whose banks have a credit exposure of €285 billion to Italy, according to Bloomberg.
