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It seems that the euro zone’s laundry list of problems just keeps getting longer, as financial and political troubles in Italy could bring much more pain to the region than Greece or France.

What’s the latest in Italian politics?

Just recently, a ruling from the Italian constitutional court opened the possibility of early elections in the country. The court decided to scrap the “run-off” segment of the elections and ruled that the parliamentary majority will be handed to any party winning 40% of the vote.

Over the weekend, former Italian PM Matteo Renzi resigned as leader of the Democratic Party (PD), making the political situation a tad more complicated.

The lack of a united Democratic Party front could make it easier for its biggest rival, Beppe Grillo’s Five Star Movement, to snatch the victory. In case you’re mistaking this for the dudes who are feeling so fly like a G6 (That’s Far East Movement yo!), Five Star Movement is actually the political party responsible for Renzi’s defeat in last year’s Italian referendum.

Now Grillo and his boys have pledged to hold another referendum on the country’s EU membership, although an “Italeave” ain’t all that easy to accomplish.

What’s happening in the banking sector?

Just the same, the result of the Italian referendum and all the political hoopla put financial troubles back in the spotlight as these have driven up bond yields and made it difficult for the nation’s banks to attract capital. Word through the forex grapevine is that the government is considering a 5 billion EUR state rescue of a couple of struggling regional banks, Veneto Banca and Banca Popolare di Vicenza, and is in talks with EU leaders on taking a similar approach to bail out Monte dei Paschi di Siena with 8.8 billion EUR.

But even if the Italian government manages to secure around 13.8 billion EUR worth of funds to keep these banking institutions afloat, there’s still plenty of work to be done to cover the country’s gross non-performing loans, which amount to 200 billion EUR according to recent financial stability reports.

How is it worse than Greece?

Note that Italy’s debt as a share of its GDP rose from 123% to 133% since 2012 while that of Greece climbed from 159% to 183%.

A Greek debt default could cost approximately 100 million EUR of taxpayer money, which is pocket change compared to the damage that an Italian debt crisis might cause.

Several market players are already betting that the Italian bond market could collapse, as yields have doubled to 2.3% over nearly six months while yields on Greek notes ticked up from 6.7% to 8%.

What makes things worse is that the ECB and several Italian banks are the main holders of the country’s government bonds so a crash would definitely do a lot of damage to the entire region’s financial standing. Economic gurus predict that some form of debt restructuring will be necessary for Italy at one point or another since it is also facing stagnant growth.

Think of it as an individual struggling to pay credit card debt while unemployed or seeing no pay growth. The interest just piles up over time and the poor bloke gets buried deeper and deeper in debt!

And don’t forget that Italy is the region’s third-largest economy so it would definitely take more than just a mere bailout to save it from a potential debt crisis. The nail in the coffin is that other top dogs such as France and Germany hold a considerable portion of Italian bonds in their balance sheets so a crash would likely trigger a chain reaction and put the stability of the entire bloc in jeopardy.

According to a top EU official, the European Commission is set to give a warning to Italy this week regarding its rising debt levels.

Based on their number-crunching, the country’s public debt could swell to 133.3% of its GDP this year and EU rules state that it should start reducing its debt by about 3.6% per year.

If there are no measures put in place or progress made in the next few months, the Commission could launch disciplinary action called an “excessive deficit procedure” against Italy in May.

So far, the government has pledged to cut its structural deficit, which advanced from 1.0% of its GDP in 2015 to 1.6% last year, by 0.2% this year through measures to be implemented by the end of April.

EU rules state that governments need to shave off 0.5% of their structural deficit annually until they reach a budget surplus, but officials have been pretty lenient to the likes of Spain and Portugal in the past few years so there seems to be a slim chance of an excessive deficit procedure coming in play.

Either way, make sure you keep close tabs on what’s going on in Italy since headlines could push the shared currency around in the coming weeks!