— Analysis

  1. European view

    The Inflation Target Trap

    by Daniel Gros

    IT
    24 Exclusive content for IT24

    Central banks have a problem: growth in much of the world is accelerating, but inflation has failed to take off. Of course, for most people, growth without inflation is the ideal ...

  2. Markets

    From bank loans to capital markets union, Europe builds bridge finance: mini-bonds and Schuldschein

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    On the one side, bank deleveraging is reducing credit flows to the economy. On the other side, the creation of the Capital Markets Union is gaining momentum but it is a slow moving process. That’s why Europe needs bridge finance products, the “economics of private placements”, that is, hybrid instruments that help SMEs in the not-so-easy transition from bank loans to equity or bond public issues. Italy and Germany ...

  3. Markets

    Markets focusing on Italy's debt sustainability, yet again

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    Italy’s debt sustainability ghost is hovering over financial markets, yet again. “All scenarios are back on the table,” said an analyst commenting on UK’s surprise election results and Italy’s surprising setback on the electoral law reform . One of the worst case scenarios being analyzed by market participants worldwide is Italy’s political landscape and the risk of an upward trend of debt/GDP ratio, which hit ...

  4. European view

    EU economy needs advanced capital markets

    by Valdis Dombrovskis and Jyrki Katainen

    IT
    24 Exclusive content for IT24

    It’s springtime and Europe’s economy is flourishing. The EU’s economy is growing for the fifth year in a row, a trend that is set to continue this year and next. But ...

  5. Markets

    The rescue of Banco Popular, a lesson that Italy has to study

    by Alessandro Graziani

    IT
    24 Exclusive content for IT24

    The emergency bank rescue of Banco Popular in Spain on the part of its rival Santander highlights how decisive the time factor is for preventing a bank crisis from becoming systemic and undermining the confidence of depositors. In just a few weeks, the government and Spanish authorities reached agreement with the European Central Bank and the European Commission and together activated an emergency plan that, in full respect of EU rules and without recourse to ...

  6. Markets

    Bank of Italy and the markets share the same sense of urgency: Italy's debt/GDP decline "must commence without delay"

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    The Bank of Italy and foreign investors share the same preoccupation: Italy’s debt/GDP ratio is too high, at 133%, and it must fall in a constant and protracted way, its descending trajectory must kick off as soon as possible: “Italy’s high public debt is a source of vulnerability and acts as a brake on the economy” said Governor Ignazio Visco in his year-end remarks on May 31 at the central bank’s ...

  7. European view

    The costs and benefits of "ExItaly"

    by Biagio Bossone

    IT
    24 Exclusive content for IT24

    Durand and Villemot (2016) examine the effects of Italy's possible exit from the euro (“ExItaly”). According to their estimates, the “new lira” ...

  8. Markets

    Record-breaking buy-back with syndicated exchange smooths the edges of the biggest BTP Italia ever

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    The biggest issue ever placed by the Italian Treasury in one shot is the BTP Italia maturing November 12 for €22.4 bn. It is just too big, a monster dimension, not easy to be refunded there again in one shot: its size had to be reduced, to smoothen the liability management of Italy’s public debt. But how? The BTP Italia is a special bond, linked to the Italian inflation rate and aimed at retail investors: ...

  9. Markets

    Here's why markets are shrugging off terror attacks

    by Morya Longo

    IT
    24 Exclusive content for IT24

    At least 189 people fell victim to terror attacks in western countries in 2016. That is 174% higher compared to 2015, according to the insurance broker Aon, and it is a signal of war. Yet many markets are close to historical highs, or rising strongly. There are two possible reasons: either the financial markets have become too cynical and dehumanized, or the attackers are no longer able to create any sort of terror. Whatever the ...

  10. European view

    Euro, the big defeat for the economics profession

    by Alberto Bagnai

    IT
    24 Exclusive content for IT24

    The euro has been the greatest success of economic science but is becoming the most humiliating defeat for the economics profession. I thank Il Sole 24 Ore for it openness in allowing me to set ...

  11. Markets

    BTP Italia's 11th issuance kicks off smoothly, aiming to attract retail and institutional demand

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    Italian savers’ favorite inflation-linked bond, BTP Italia, kicked off its eleventh issuance yesterday, May 15, with 6-year maturity, a guaranteed minimum annual (real) coupon rate set at 0.45% and €1.615 bn orders with 29,000 contracts from retail investors: small savers will have up to Wednesday to book their orders, which will be totally filled by the Treasury. On Thursday it will be the turn ...

  12. Markets

    Macron's victory: a game changer for Italy sovereign risk?

    by Isabella Bufacchi

    IT
    24 Exclusive content for IT24

    The euro area market focus is shifting from France to Italy, holding the hope that Emmanuel Macron’s victory will become a game changer for Italy’s stubbornly high sovereign risk. After digesting Brexit and Grexit with some hic ups, after getting rid of Frexit and coming to terms with Trumpism, markets are bound to re-open the Italian file as Italy’s unresolved political turbulence and populism continue to mix up with high public ...

  13. European view

    History doesn't run in reverse

    by Barry Eichengreen

    IT
    24 Exclusive content for IT24

    A good case can be made that creating the euro and Italy's participation were both historic mistakes. The problem, we now know, is that monetary union without banking union and ...

  14. European view

    Return to the Lira? A long-run view

    by John H Cochrane

    IT
    24 Exclusive content for IT24

    Should Italy have her own currency, and run her own monetary policy? For today, let’s focus on the long-run question, leaving out for now the transition and any immediate ...

  15. Markets

    Atlantia said to be mulling counterbid on 100% of Venice airport operator SAVE

    by Laura Serafini

    IT
    24 Exclusive content for IT24

    Highways operator Atlantia has been considering for several week the opportunity to launch a takeover bid on 100% of SAVE, which controls the airport of Venice. The company has already contacted financial and legal advisors with the intent of moving soon, possibly by the summer. Publicly however Atlantia continues to rule out such option. “We are neither aggressive by nature, nor passive,” Chairman Fabio Cerchiai said ...

  16. Markets

    Latest inflation data put to rest debate over possible early tapering by the ECB

    by Alessandro Merli

    IT
    24 Exclusive content for IT24

    The sharp drop in eurozone inflation at 1.5% in March is going to appease, at least for now, the debate about the tapering of monetary stimulus by the European Central bank.At his latest press conference, ECB President Mario Draghi said he expected inflation to remain close to 2% for some months. The rapidity of the decline could have taken the ECB by surprise. The debate about an early reduction of the monetary stimulus which started in ...

  17. Markets

    LSE-Deustche Börse merger is the first victim of Brexit

    by Alessandro Merli

    IT
    24 Exclusive content for IT24

    The skyline of Frankfurt, which locals love to call “Mainhattan,” dreaming of New York on the Main, is throbbing with cranes. The construction of office buildings has been moving ahead without pause for months. The financial capital of Germany is hoping to capture a good part of the flow of the financial institutions and services firms that will be leaving the City of London. Time will tell if that's a valid expectation, or a ...

  18. European view

    Brussels formally blocks LSE-Deutsche Börse deal

    by Beda Romano

    IT
    24 Exclusive content for IT24

    The European Commission yesterday refused to clear the merger plan between the London Stock Exchange and Deutsche Börse, citing competition regulation. The announcement came on the day ...

  19. Markets

    Bond markets favor the periphery and Italian treasury reopens 50-year BTP

    by Claudio Celio

    IT
    24 Exclusive content for IT24

    The round of government bond auctions at the end of March has come at a favourable market moment for euro zone periphery debt, and for Italy especially. Yesterday Italy issued €2.5 billion worth of zero coupon CTz bonds at negative rates (-0.085%) and did better than Spain and Portugal on the secondary market despite there being plenty of supply on the agenda up to Thursday (a total of €18 billion). On the secondary ...

  20. Markets

    Italian banks take up the most liquidity in ECB's Tltro2, €62 bn out of €233 bn total

    by Luca Davi

    IT
    24 Exclusive content for IT24

    European banks showed record appetite in the fourth and final sale of cheap funds by the European Central Bank, also known as Tltro2. Demand from 474 lenders was for €233 billion, double the expected size and a record since the program was launched. It’s difficult for European banks to waste a good opportunity to fund themselves at almost zero interest rates with four-year maturity loans, especially when loans can yield up to ...

  21. Markets

    Why Veneto popolari banks' shareholders feel betrayed, even as they lean towards accepting a settlement

    by Katy Mandurino

    IT
    24 Exclusive content for IT24

    More than three years have passed since the case of the “Veneto popolari” mutual banks exploded, starting the financial decline of two major Italian lenders: Banca Popolare di Vicenza and Veneto Banca. These two banks were strongholds of one of the richest and industrialized regions of Europe, the Veneto in Northern Italy. And still we are unable to come to terms with how such a collapse could have happened. It has been an unrelenting ...