Italy must continue Monti's reforms, warn ECB, Germany

10th December 2012, Comments 0 comments

Germany's foreign minister and a top European Central Bank member warned on Monday that Italy must press ahead with reforms introduced by Prime Minister Mario Monti after he announced his resignation.

In comments to newsweekly Spiegel's online version, Foreign Minister Guido Westerwelle cautioned: "Italy must not stand still after two-thirds of its reform process."

The minister added: "That would bring new turmoil not only to Italy, but also to Europe."

A finance ministry spokeswoman said Germany did not believe the upheaval in Rome would lead to a "destabilisation" of the eurozone, when asked by a reporter at a regular government briefing.

"We assume that Italy will continue to live up to its responsibilities with regard to Europe and continue to pursue the reforms it has started," she said.

A spokesman for Chancellor Angela Merkel declined to be drawn on the developments in Italy but said the German leader was likely to see Monti later on Monday at the awarding of the Nobel Peace Prize.

"I can only say that the chancellor and Prime Minister Monti have always worked well together and she has praised his work repeatedly," the spokesman said.

"She is expected to see him today at the Nobel ceremony in Oslo and will convey her extraordinary appreciation. Anything else would be speculation."

He added: "It is a valued tradition that governments do not comment on domestic political developments of partner countries."

During a weekend of political drama in Italy, Monti announced he would soon step down and former leader Silvio Berlusconi launched a comeback bid, prompting financial analysts to predict stormy times ahead for Italian markets.

The Italian stock market dropped more than three percent in morning trading on Monday and borrowing costs spiked amid jitters over the political situation.

Merkel had strained relations with Berlusconi but ties have improved markedly under Monti, who is credited with enacting broad-based economic reforms which had brought down Italian borrowing costs sharply.

ECB Executive Board member Joerg Asmussen told Germany's Bild daily that Monti's government had "achieved a great deal in a short time: winning back investor confidence and pushing forward budgetary consolidation."

He said: "Whoever governs Italy, a founding country of the EU, after the election must continue this course with the same level of determination."

Italy is now due to hold elections as early as February -- well before the government's mandate runs out at the end of April.

The head of the EU's bailout fund, Klaus Regling, also expressed his concern in an interview published on Monday.

"In the past year, Italy has carried out important reforms. Until now the markets have rewarded that, but they reacted with worry at the events that took place at the end of last week," he told the Sueddeutsche Zeitung.

© 2012 AFP

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