Italy’s banks are due for a severe banking crisis in the coming quarters, as the country’s GDP has plummeted since 1995. Whilst Italy’s neighbouring countries overcame the fallout from the financial crisis, Italy’s GDP has sunk further since 2009. The Italian economy is now expected to contract by 1.5% this year, and shrink another 0.5% next year. To put the bad debt in context for US readers, our banks would have to have nonperforming loans of $3.8 trillion to be this badly off. Now, the country risks destabilising its position as the eight largest economy in the world as its banks undergo a crisis and decrease the value of the large amount of sovereign bond that it holds in check.
Italy’s banks are due for a severe banking crisis in the coming quarters, as the country’s GDP has plummeted since 1995. Whilst Italy’s neighbouring countries overcame the fallout from the financial crisis, Italy’s GDP has sunk further since 2009. The Italian economy is now expected to contract by 1.5% this year, and shrink another 0.5% next year. Now, the country risks destabilising its position as the eight largest economy in the world as its banks undergo a crisis and decrease the value of the large amount of sovereign bond that it holds in check.