“Since Italy almost two years ago ran on the brink of bankruptcy, successive governments have above all had to put the public finances in order, in line with European directives and the essential needs of fiscal consolidation. These efforts met with some success, and the deficit hasn't substantially strayed from the magic 3% since then. Despite the government crisis, we will remain within these limits again this year. However, this policy of prolonged austerity, in the presence of a zero-growth Europe, has put Italy to the test”. As former Prime Minister Romano Prodi began his speech on the columns of the Messenger, assuming the possibility – as Spain has already done – of a bad bank for Italy as well.
“Looking ahead – continued Prodi -, in addition to the major reforms that are always being talked about and which will require time and political stability, means giving a rapid boost to the economic system without weighing down the public budget. In Italy this operation passes through the necessary strengthening of the banking system”. If we want to revive the body of our economy
first of all it is necessary to restore its blood circulation: “In other words, it is necessary to enable the banks to do their job as suppliers of the financial resources indispensable to the birth and life of businesses. Resources which, excuse the repetition, are supplied almost exclusively by banks in Italy. To be able to do their job they must therefore be relieved of part of the bad debts that make it impossible. It is not a question of nationalizing the banks or of loosening the control that must be exercised over those who issue credit but of acknowledging the situation in which we have fallen and from which we will not be able to get out without a radical change. It therefore becomes necessary, with the cooperation of private and public subjects, to give life to a structure which, by taking over a part of the "bad" credits of the banks, allows the blood circulation of our economic body to be restored. We certainly cannot repeat to the letter what Spain has done which, in various forms, has revitalized a much more unbalanced banking system than ours, providing it so far with over 60 billion euros for the necessary recapitalization”.
The former Prime Minister and leader of the centre-left also explained: "We cannot do it because this operation is considered by Eurostat as a pure and simple increase in public debt and we are not able to afford it, even if our economy it is certainly in better condition than the Spanish one. We must therefore reflect on the hypothesis of a more complex initiative, which involves the entire national financial system, from the Bank of Italy to the Cassa Depositi e Prestiti and includes interventions by private capital supported by a possible public guarantee. A carefully studied and regulated system operation could only receive the necessary blessing of the European Central Bank, attentive by definition to the sound
functioning of the banking system of all countries. I understand that I am raising an issue that very few want to address head-on but, just by reading the IMF report, it is clear that our banks have done almost everything possible to improve their level of solvency but that more than that cannot be done given the difficult boundary conditions. If that's the case I guess
Bank of Italy, ABI and the representatives of the Ministry of Economy must reflect together on how to construct this instrument. I have long hoped that a strong recovery would make it unnecessary but the course of events leads me to think that without the recovery of the banking sector it will be very difficult to get our economic system back on track".
