by Eric J. Lyman
ROME, May 29 (Xinhua) -- The governor of the Bank of Italy used what would have otherwise been a technical and routine review of the country's recent economic performance on Tuesday to deliver an impassioned pro-European Union message while also downplaying investor nervousness about Italy's ongoing political standoff.
Governor Ignazio Visco made his remarks -- officially "The Governors Concluding Remarks, Annual Report 2017" -- with the country swirling amid political and economic turmoil. The conditions resulted in Visco, who has held his position since 2011, making a rare foray into politics, warning that the country was "a few short steps away" from losing what he called the country's "asset of trust" with citizens and investors.
More than 12 weeks after Italy's inconclusive general election, the two populist political parties that exceeded expectations in that March 4 vote are calling for massive protests marches to put pressure on Italian President Sergio Mattarella. Over the weekend, their attempt to form a government collapsed after Mattarella refused to confirm Paolo Savona, a Eurosceptic economist, as finance minister, as the two parties had proposed.
Meanwhile, political chaos and fears the populist Five-Star Movement and the nationalist League could weaken Italy's ties with the European Union and cast the future of the euro currency in doubt sent investors scrambling from Italy.
On Monday alone, companies listed on the Italian Stock Exchange lost more than 12 billion euros (13.9 billion U.S. dollars) in value and on Tuesday, the yields on Italian government bonds reached levels last seen in 2013. The increase compared to Monday's debt yields was the biggest one-day jump since widespread record keeping began nearly 25 years ago.
Visco tried to address those issues in much longer-than-normal remarks Tuesday.
EUROPE'S DESTINY
"Italy's destiny is that of Europe," Visco said. "We are part of a very large and deeply integrated economic area, whose development determines that of Italy and at the same time depends on it."
Visco did make a nod toward the concerns about Italian autonomy in an increasingly inter-linked European Union held by many backers of the Five-Star Movement and the League: "It is important that Italy has an authoritative voice in forums where the future of the European Union is to be decided," he said.
But, still, his remarks were overwhelmingly pro-European Union, stating that any new government in Italy was obligated to trust European Union treaties limiting government budget deficits and the size of debt as a percentage of the country's gross domestic product.
"The rules of the game can be debated, even criticized; they can surely be improved," Visco said. "Yet we cannot disregard constitutional constraints."
Despite his warnings about Italy's fragile "asset of trust," Visco said the economic nervousness over Italy was overblown: "There is no justification, other than emotion, for what is happening today in the markets."
Speaking about the economy in general, Visco said Italy was on the right track but needed to spark more economic growth, pay down government debt, and encourage companies to innovate. But those views were mostly lost amid the remarks from his rare venture into national politics in a speech much longer than normal.