The Financial Times reported that Italy’s €4 trillion banking system is at risk from Bank bail-ins (Bank bail-in’s what are they?) and it all hinges on Sundays referendum. Let’s not forget it wasn’t that long ago that Cyprus fell victim to Bank bail-ins. There is a certain air of inevitability about it all, irrespective of which way the Italian electorate may vote. With all the fear around it, Italy’s financial institutions are haemorrhaging money. This further questions the solvency of the Italian banking system.
A No vote on Sunday will show a complete lack of confidence in the Italian governments strategy to breath life into its failing banking system. Proof positive of this, is its largest bank Monte di Passchi’s where shares have already fallen by 12%, after which they pulled the plug on trading.
Will Mr. Renzi resign?
“Up to eight of Italy’s troubled banks risk failing if prime minister Matteo Renzi loses a constitutional referendum next weekend and ensuing market turbulence deters investors from recapitalising them, officials and senior bankers say.
Mr Renzi, who says he will quit if he loses the referendum, had championed a market solution to solve the problems of Italy’s €4 trillion banking system and avoid a vote-losing “resolution” of Italian banks under new EU rules.”
Source: Financial Times (Copyright The Financial Times Limited 2016)
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