Melvyn Krauss, Columnist

Italy's Bank Bailout Serves German Interests Too

The Italian solution helps stabilize the broader banking crisis and removes an obstacle to tighter monetary policy.

July 7, 2017 at 5:28 AM UTC

Melvyn Krauss is a senior fellow at the Hoover Institution at Stanford University and an emeritus professor of economics at New York University.

A bailout even Germany can like.
Photographer: Alessia Pierdomenico/Bloomberg

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As Europe’s politicians digest the lessons from Italy’s recent 17 billion euro ($19.34 billion) bailout of two Venetian banks, two schools of opinion have emerged. The majority view is that the bailout, while less than ideal, at least brought greater financial stability to Italy.

Italians themselves seem pleased with the outcome. So far there has been no great taxpayer outcry, a sign that the Italian public is ready to pay a price for returning stability and confidence to the country’s banking system. Further evidence that Italian taxpayers are willing to pay up for bank stability is the injection of 5.4 billion euros in Banca Monte dei Paschi di Siena, a transaction that was approved this week by European Union officials.