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Italian Populists Are Backing Away From Euro Exit

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Niblett, Page on the Importance of Elections in Italy

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Arrivederci euro? Italy’s populist parties have been flirting with the idea of dropping the single currency ahead of a general election on March 4. The euro region’s third-biggest economy abandoning the currency could spark a doomsday scenario complete with capital flight, banking crises and havoc in public finances. But the recent rhetoric falls short of indicating that the the populists are prepared to go through with it.

The anti-establishment Five Star Movement, which is leading in the polls, has long promised a consultative referendum on whether to abandon the euro. Hedge funds and other investors have been quizzing lawmakers in Rome about the risk to Italian assets.