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"Today's financial problems reflect public budget policies of past years"
- Ignazio Visco, Governor at the Bank of Italy
Italian borrowing costs rose to record highs since the creation of the European Monetary Union with investors demanding up to 7.814 per cent for 2-year government bonds during an auction on Friday. The nation managed to raise 10 billion euros, as it was expected.
"The market action surrounding the Italian auction today provides additional precursory indications that the European government bond market is severely disrupted and it will likely struggle to absorb the demanding pipeline of refinancing European sovereigns need to secure," said Silvio Peruzzo, an economist at Royal Bank of Scotland Group Plc in London.
"Today's financial problems reflect public budget policies of past years. We cannot be deluded into thinking that macroeconomic measures alone resolve the shortcomings," said Ignazio Visco, Governor at the Bank of Italy.
"Only by resolving our structural weaknesses can we regenerate the Italian economy," said Visco, who is also a member of the European Central Bank's governing council.