Top menu

Italy and the new Eurozone risk morphology

Sovereign yield spreads necessarily translate into different funding costs for businesses resident in the various member states, thus causing undue competitive advantages for the economy that can rely on lower interest rates.

It’s a well-established fact that the eurozone as a monetary union is a weird animal. Among the main reasons that surely stands out is its one-size-fits-all monetary policy that does not fail to be continually targeted by criticism from economists, politicians and other stakeholders in the various member countries.

The ECB’s monetary policy interventions share the mandate constraints of this important institution, which can be summarized in two points:

  • The primary objective to maintain price stability with an inflation target lower but close to 2%
  • The statutory ban on monetary financing

Without prejudice to the objective of price stability, the ECB can also support the general economic policies of the euro area including those aimed at pursuing full employment and balanced GDP growth.


Read more