Economy / Foreign relations

Can an Italian Government still influence its bond yield spread?

The Italian Minister of Economy Pier Carlo Padoan commented today the dramatic decrease of the Italy/Germany bond yield spread, which is now under 90. Mr Padoan argued that the financial market are taking note of the bold reforms enacted by the Italian Government.

However, one could also link the decrease to the Quantitative Easing program launched by the European Central Bank under strong pressure from some Member States, including Italy. The Bank is headed by Italy’s Mario Draghi.

The situation looks similar to the one occurred in 2011-2012, after the appointment of Mario Monti’s technocratic Government. The new Executive enacted a dramatic overhaul of the Italian pension system, but the spread stood almost still. The real decrease came after some months, when Mr Draghi publicly stated that the European Central Bank would act in order to protect the Eurozone.

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