ROME – The first instalment of a “financial safety-net” has arrived from Brussels in Italian banks, Italian Treasury officials confirmed on Friday. The “precautionary measure”, which has been approved by the European Commission, is a European initiative that Italy has asked for in case of need following the post-Brexit instability of the market, of which all European banks are at the mercy.

 The intention behind the scheme, which promises to provide member states with a sum of up to 150 billion euros, is to give governments the ability to intervene in the case of banks being faced with crises of liquidation. However the Italian government has made it very clear that these funds do not equate to a “final solution for banks with problems of capital”, nor “the entry of the State as a share-holder” but as a safety-net in the event of Italian banks threatening to give way to solvency.

 Officials in Brussels have underlined that they “do not expect the necessity to use [the funds] to arise” but rather that they are providing Italy with a “precautionary measure” to keep the economy afloat in case of crisis. They reiterated that the sum “cannot be used as a means of recapitalisation” and sources from the Italian treasury have confirmed that the preventative mechanism has only been drafted in to action after a “hypothetical analysis of every possible situation.”

 This comes as a sign that Brussels understands the need to prevent Italy from following the UK in a bid to disengage from the EU in order to prevent the total dissolution of the Union. The measure, which is only available for six months, until December 31 has been welcomed by Italian financial officials, as it offers Italian banks the guarantee against liquidation in this period of market instability immediately following the British exit vote, without creating an unsustainable dependency on European resources.  

 Carlo Bastasin, writing for ‘Il Sole’ said that it is “reassuring that on this occasion EU institutions and Italian banks managed to work together to avert a crisis. This will allow leaders to make political decisions in a climate of increased financial stability” confirming this positive collaboration between the European Commission and the Italian government. Yet he calls for this to be taken a step further to provide the EU with a sounder financial basis; “we must complete the banking union” he said, an opinion echoed by many others in EU financial circles.

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