The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

How the banking union fell into an Italian abyss

Despite the latest attempts to stymie them, Eurosceptic populists remain the most powerful political force in Italy – largely thanks to anger at a banking crisis, often fanned by the ECB. Now their approach to power is killing the last chance of fixing the banking union, and possibly the euro.

don_banner_column-780



European bank CEOs at the Institute of International Finance’s (IIF) meetings in Brussels last week expressed lofty ideas about how financial integration can fill the power gap with US capitalism.

It is wishful thinking. The near formation of a government by rival Italian populists Luigi Di Maio and Matteo Salvini is the elephant in the room at the meetings.

Brexit, it seems, has not ended European fragmentation. Consensus is in ever shorter supply, even on the fundamentals of currency union. As a result, the best that European and especially Italian banks can realistically hope for is market complacency on political risk, and perhaps less-stringent regulatory demands.

This might not be a return to the 2011 crisis, yet. Italian president Sergio Mattarella’s refusal of the populists’ choice of finance minister means fresh elections, more instability and possibly another card for the populists to play.

But the populists’ approach to power is making it far less likely that the currency union will complete its banking union. Indeed, their force relies not just on a desire to do away with European budgetary rules but also with bail-in rules, a foundation of banking union.




You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree