EUROZONE-GREECE/ITALY ANALYSIS Analyst says few signs in Italy of knock-on effect from Greek vote

Record ID: 148297

  • Title: EUROZONE-GREECE/ITALY ANALYSIS Analyst says few signs in Italy of knock-on effect from Greek vote
  • Date: 6th July 2015
  • Summary: MILAN, ITALY (FILE - FEBRUARY 20, 2014) (REUTERS) UNICREDIT OPERATIONS ROOM VARIOUS OF TRADERS WORKING IN OPERATIONS ROOM
  • Embargoed: 21st July 2015 13:00
  • Keywords:
  • Location: Italy
  • Country: Italy
  • Topics: General
  • Reuters ID: LVA442L15HO043CWSKIWLJG5TM4S
  • Aspect Ratio: 16:9
  • Story Text: Concerns of a possible knock-on effect from the Greek referendum result on Italy were so far not being met with clear signals of contagion, the politics professor of Rome's John Cabot University said on Monday (July 6).
    The euro tumbled against the dollar in Asian markets after Sunday's (July 5) setback for Europe's monetary union, and European shares and bonds took a hit when markets opened after the weekend. But the losses were contained and there was no sign of serious contagion to other weaker eurozone sovereigns.
    Franco Pavoncello, who also acts as the university's president, said the situation in Italy was very different from the start of the economic crisis a few years ago.
    "Well it has done a lot of reforms, starting from the pension reform, the levels... you know, let's not forget that we were talking about a spread at 500 points, we were talking about a sovereign debt with an interest of 7.5 at the time of the Berlusconi fall. Right now, we're talking, this morning, we are talking of 2.3, 2.4 so we don't see the kind of panic projected in the markets and I think that is the crucial thing. We can talk about newspapers saying 'oh, there is a lot of fear in the country' but we want to see clear signals of that and if one looks at the obvious signals which are the bonds and the euro, I don't see that happening right now," he said.
    The European Central Bank was holding a conference call on Monday (July 6) to discuss its emergency liquidity for Greek banks.
    German Chancellor Angela Merkel and French President Francois Hollande were due to meet in Paris later before an emergency summit of eurozone leaders on Tuesday (July 7).
    Pavoncello said the fresh air of new negotiations which opened after the vote may have helped Italy and that the situation may change once it has been established which direction the talks are headed.
    "What I think might change is once people understand how that negotiation is going to go ahead but there is a paradox here because the euro for instance right now is positive, is gaining on the dollar. So, I think that while there is concern, there is also the typical situation which is increased clarity. Markets like clarity and the euro likes clarity in terms of what is happening. Now, I believe that the markets know that this is not 2011, that Italy, Spain, and Portugal are in a very different situation and also the European Central Bank is in a completely different situation. (President of the European Central Bank Mario) Draghi has shown very clearly that he is willing to inject liquidity in order to protect these countries," he said.
    Italian Prime Minister Matteo Renzi, writing on his Facebook page on Monday, said the high-level eurozone meetings slated for Tuesday must resolve Greece's debt crisis once and for all.
    Renzi also said the European Union also needed to reform itself and put an emphasis on "values", not just numbers or parameters.
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