Economically, “it’s been a bleak
start to the year for Italy”, said an
editorial in The Local. It’s true that
“bankrupt Greece might have stolen
the limelight”, in the years following
the 2008 financial crisis, but Italy’s
economy isn’t much better. The
Italian economy is currently “limping
along” and if it “goes the way
of Greece, the impact will be
monumental, not just for Europe
but the whole world economy”. The
banks of Europe “aren’t in a healthy
state right now, but the situation in
Italy is far worse”. Bad loans are
becoming a big problem: loans which fall into this group are classified as those that “are not
being paid back as per the agreement between the borrower and the lender”. By the end of
December 2015, the amount of bad loans in the Italian banking system was estimated to be $220
billion. “Italy’s major banks and corporations are starting to feel the pain, with stocks in Monte
dei Paschi di Siena, Banca Carige, Unicredit, and Fiat falling dramatically in mid-January.” There
is some good news, however. Experts at Fitch ratings agency said that the country’s banks
“despite the huge amount of bad loads on their books, appear to have ‘adequate solvency,’ at
least enough to avert total collapse”.
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