Bank of Greece Blames Bank Stocks' Rout on Contagion From Italy

Greece’s central bank blamed Italy’s populist fiscal policy for a plunge in the stock prices of local banks, in the first official acknowledgment that the country’s plans to widen its budget deficit next year are having effects elsewhere in the euro area.

“The recent stock market developments in respect of the banking sector are not related to the soundness of Greek banks and are due to purely exogenous factors, such as rises in interest rates internationally and in Greece’s neighboring countries in particular,” Bank of Greece Governor Yannis Stournaras said in a statement on Wednesday.