What the Eurozone Does for Italy

The European Central Bank promised it would prevent Rome’s borrowing costs from spiraling out of control, and it looks like the bankers meant it. Data released last week highlight the subsidy the ECB is already offering for Italian borrowing, while pointing to political dangers ahead for the central bank and President Christine Lagarde.

The ECB has become preoccupied in recent years with the divergence in borrowing costs between the eurozone’s managing fiscally healthy members and the profligate—a gap most often benchmarked by the spread between Italian and German bond yields. Ms. Lagarde discovered this is part of her job as ECB chief early on, when markets punished her in March 2020 for saying she wasn’t in the business of managing spreads.

https://www.wsj.com/articles/what-the-eurozone-does-for-italy-christine-lagarde-european-central-bank-mario-draghi-11659703692 What the Eurozone Does for Italy

Alley Einstein

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