Rome

Bank of Italy chief says spread offsetting reforms

'Full effects cannot be deployed while worry is high' says Visco

Bank of Italy chief says spread offsetting reforms

Rome, October 31 - The head of the Bank of Italy on Wednesday said economic reforms in the country will not be able to take full effect if the spread between Italian 10-year bonds and the German benchmark remain high. "They will not be able to deploy their full effects if doubts and uncertainties remain over the future," said Ignazio Visco. The spread, an important indicator of investor faith in Italy's ability to weather the euro crisis, was 344.8 points on Wednesday. Italian Premier Mario Monti has been trying to get the figure down since taking the helm of a government of non-political technocrats nearly a year ago, instating a series of austerity measures and economic reforms. Visco said Wednesday that those reforms will have positive long-term effects, despite enduring problems such as rising unemployment and public debt in the short-term. "The budgetary measures implemented by the Monti government could not but have a negative impact on short term economic trends, but they avoided scenarios far worse than what we presently see," he said. "We will need to move towards even more austerity".

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