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Merkel optimistic Italian reforms are working

The Local · 29 Aug 2012, 16:11

Published: 29 Aug 2012 16:11 GMT+02:00

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"The wide-ranging consolidation and reform agenda of the Italian government are impressive... and I am personally convinced that these reform efforts will bear fruit," Merkel said after talks with Italian Prime Minister Mario Monti.

"I think we need to continue along this path together," added Merkel.

Monti is battling to drive down the debt of the eurozone's third largest economy with a series of austerity packages and tax hikes, as well as spur future growth with a raft of reforms.

"Markets are in the process of recognising the successes," Monti said, noting that earlier on Wednesday Italy had raised €9.0 billion in six-month debt at sharply lower rates.

Merkel also described the successful bond auction as "hopeful."

Asked whether they had discussed the possibility of Italy applying for a sovereign bailout, Merkel said that "nothing concrete" had been put on the table.

"We discussed the fact that the ECB is preparing decisions. We know our funds, the EFSF and the ESM, and feel well equipped politically," said Merkel, referring to the EU's two bailout pots.

However, the two appeared to clash on the idea of giving the European Stability Mechanism, the future bailout fund worth €500 billion, a banking licence to let it borrow directly from the ECB, giving it unlimited firepower.

Merkel quoted ECB President Mario Draghi as saying that such a banking licence "was not compatible with the EU treaties" and added: "That is also my conviction."

Monti said a banking licence was "conceivable" but as part of a wider package of measures and in a longer-term perspective.

Story continues below…

"We know that we have not completed our stabilisation but we have achieved a lot in a short time -- more than we had achieved in several years in eurozone integration," said Merkel.


The Local (news@thelocal.de)

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Your comments about this article

16:56 August 29, 2012 by Livioxxx
No fear, if Berlusconi is elected again in 2013 he will surely destroy everything Italy has achieved until now.
20:05 August 29, 2012 by smart2012
Monti has done a great job, now Italians have to see it, and to see it they need a clear direction from merkel on what Germany wants to do eg with Greece. The indeciveness of merkel so far is increasing anti europe feeling (everywhere incl Italy and Germany). If this will change then berlusconi will not win, if euro will be stucked with Greece in one year from now then berlusconi can win again, and merkel will lose against anti euro parties.
21:00 August 29, 2012 by Englishted
Shame he wasn't elected only appointed ,but elections are no longer the E.U.'s strong point if they ever were.
12:00 August 30, 2012 by AlexR
That's just diplomacy. She said the same about the Irish, Portuguese and Spanish reforms. Now if you read economy figures those countries, you'll see that their "reforms", i.e., the austerity cuts, are certainly not working. The unemployment increases, the deficit gets bigger, the consumer demand hit rock bottom. How exactly those reforms are "working"?

Regarding Italy, they are lucky enough that they weren't attacked by the markets -yet. The "markets" first focused on Greece then Ireland then Portugal and now Spain. The first three have received bailouts which effectively finished them off in economic terms. As soon as they finish with Spain and focus on Italy, let's see then if the "reforms are working".
13:10 August 31, 2012 by truth is treason
Has Italy received any Bailout? No. Is Monti the Elected president of Italy? N0. He is ex Goldman Sachs? Yes. Italy has the 3rd largest Gold reserves and if the Gold standard is brought back then has enough to cover their debt.
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