Financial support for Italy will be costless

Whittaker, John (2020) Financial support for Italy will be costless. UNSPECIFIED. (Unpublished)

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Abstract

Loans to Italy from other eurozone countries will not increase their risk exposure, irrespective of the method of financing. This is because loans will displace an equal amount of Italy’s Target2 debt, leaving unchanged the total claim of the eurozone creditors. Italy currently has Target2 debt of €513bn to other eurozone countries through its central bank. If Italy receives grants, this will amount to forgiveness of some of its Target2 debt, which will be no loss to the creditors because its Target2 debt is unlikely ever to be repaid at full value.

Item Type:
Other
Subjects:
ID Code:
144625
Deposited By:
Deposited On:
11 Jun 2020 09:41
Refereed?:
No
Published?:
Unpublished
Last Modified:
23 Sep 2020 07:57