Goldman Frets a Huge Shift in Italian Debt Market Is Looming
- Banks may no longer be lender of last resort for government
- Shortfall in demand on cards as Italy mulls fiscal expansion
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The dreaded sovereign-bank “doom loop” in Europe may have weakened. Now comes the bad news.
Thanks to political risks and regulatory changes, Italian lenders may be reluctant to snap up domestic government bonds during market stresses -- a potentially huge structural shift in demand in the euro area’s second-most indebted nation.