Markets & Finance
Italy’s Bank Crisis Isn’t Renzi’s Problem Anymore
It’s “a huge drag on growth, but it won’t solve itself spontaneously.”
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It’s Italy’s turn. Europe’s fourth-biggest economy is the latest affluent democracy to experience a political upheaval, after voters on Dec. 4 defeated a constitutional referendum on government reforms backed by Prime Minister Matteo Renzi. He’s tendered his resignation, and while power is likely to pass to an interim government, populist parties on the left and right are calling for snap elections.
In the eyes of the markets, the main risk isn’t the drama unfolding in the halls of power in Rome. This is a country that’s flipped through more than 60 governments since World War II, so what’s one more? Italy’s shaky banks are the real worry.