Italy is the latest victim of market contagion in Europe’s ongoing debt crisis. The country has one of the largest public debts in the world, making investors worried it could be the next domino to fall given poor economic growth and domestic political tensions.
Both the country’s stock and bond markets have been under pressure. Italy’s short-term borrowing costs have already surpassed Spain’s, and long-term rates are well on their way to doing the same.
Nick Bullman, founder and managing partner of CheckRisk, told Reuters Insider that Europe’s bank “stress tests” were way too soft on Italy’s banks. He argues Unicredit and Intesa could need a minimum of 4.4 billion euros to plug the capital holes they face.