Bank of Italy says squeeze continues

Business defaults increase, mortgage failures stable

Bank of Italy says squeeze continues

Rome, April 29 - The Bank of Italy warned on Monday that Italian businesses and families are feeling economic squeeze tighten its grip further. "The flux of new loan defaults has increased," a periodic bulletin of the Bank of Italy read, referring to business loans. Meanwhile, both supply and demand for business credit have sunk, as lenders restrict loans due to the "riskiness" of potential debtors, and businesses increasingly no longer bother to ask. Italian families in 2012 saw their wealth diminish thanks to falling housing prices and sale of financial instruments, but also saw their indebtedness wane thanks to the dramatic "weakening of demand for loans". The Bank of Italy does not foresee a significant rise in home mortgage defaults, but does predict growing demand for personal loans and consumption on credit. The Italian central bank noted that Italy's Achilles heel for financial stability is its still contracting economy, while "positive signals come from...public finances" thanks to government budgetary discipline. The Bank of Italy also urged the Italian public administration to stop delaying payment on its overdue bills to private businesses, saying it is "crucial to guarantee the reduction of payment times" to "the 30-60 day limit fixed by the EU directive".

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