The financial stress in Italy is hardly new. The bad debts in the banking system have never gone away. A relatively stable government and massive money printing by the European Central Bank (ECB) has merely tapered over the issue. Now that an anti-EU government is in charge, the skeletons are coming out of the closet.
The ECB is trying to perform damage control among and between member states that still control bank supervision at the national level while at the same time paying lip service to improving the banks’ capital position.
