Italy can solve problems on its own: Bundesbank chief

14th November 2011, Comments 0 comments

Italy can solve its current problems on its own if it musters the necessary political will to do so, Bundesbank chief and European Central Bank member Jens Weidmann said on Monday.

"Italy can master its current difficulties under its own strength," Weidmann said in a speech at the Euro Finance Week in Frankfurt.

"The country is not yet making maximum use of its growth opportunities and the Italian state has amassed an alarmingly high mountain of debt," the central banker said.

"But Italy has efficient companies, comparatively low household debt. And before it joined monetary union, it had had to bear a considerably higher interest-rate burden and still managed to push through major adjustments," Weidmann said.

"What is needed here is the political will," he insisted.

Last week, Italian bond yields soared to record levels of around 7.0 percent amid fears of a prolonged political and financial crisis, setting off alarm bells around Europe and warnings that the Italian economy was too big to be rescued.

But Weidmann, who as Bundesbank president sits on the ECB's governing council, told the Financial Times in an interview that such high borrowing costs would only be unsustainable in the long run "if there is a lack of fiscal discipline and economic growth remains low."

In the short run "I do not think it is such a big an issue," Weidmann said.

© 2011 AFP

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