Bank of Italy Governor Fabio Panetta
on Thursday called on the government to maintain the good
impression it has given about the management of the “Italian
public finances” amid the energy and geopolitical crisis
triggered by the Iran war.
Speaking at a conference at the foreign ministry, Panetta said
this good perception has “kept us sheltered up to now”.
“High levels of public debt in many economies limit fiscal space
and increase market risks,” he said.
“So shifts in global investors’ perception of risk can quickly
translate into tensions with sovereign bonds and capital flows.
“The tensions in the energy markets are not only worrying
because of the immediate impact on inflation and growth, also
because of the potential repercussions on financial stability,”
he continued
“In the presence of high volatility and uncertainty,
pre-existing fragilities could become channels to amplify
shocks”.
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