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Opinion
Ferdinando Giugliano

Europe Plays With Fire on Italy Contagion

The euro zone’s finance ministers have missed a chance to make sure  blameless member countries would be more resilient in a sovereign crisis.

Italy's market woes haven't engulfed Spain, Portugal and France. But it's hard to believe that will always be the case.

Italy's market woes haven't engulfed Spain, Portugal and France. But it's hard to believe that will always be the case.

Photographer: Dario Pignatelli/Bloomberg

Italy’s populist rulers may have been hoping for some market contagion fear to help them win their budget standoff with Brussels, but so far it’s been a dog that didn’t bark. The economic program of the League and Five Star spooked investors in Italian government bonds, but failed to affect any other member state of the monetary union, barring Greece.

This has weakened Italy’s hand. Had Spain, Portugal and France suffered selloffs, the European Commission might have been more amenable to compromise and the European Central Bank would have found it harder to end monetary stimulus this year.