EU-level actions needed to restore confidence

Updated: 2011-11-24 13:59


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MILAN, Italy - The debt crisis plaguing several eurozone countries requires European Union (EU)-level actions to restore market confidence, the head of the Italian Banking Association (ABI) said Wednesday.

"Each country can do its part to restore the confidence of international markets," said Giovanni Sabatini, general director of the ABI, adding that Italy would play a more active role under new Prime Minister Mario Monti's technocrat cabinet.

"But in order to solve this crisis of trust, EU-level actions are needed, as Europe must show a strong and immediate will to support the euro through implementing adequate reforms," he said.

He said Italy was harder hit by the crisis than other countries due to its high public debt, but that the country's fundamentals were solid.

"Italy's aggregate debt - which is the sum of public and private debts - is aligned with the French aggregate debt and slightly higher than the German one, while it is lower than the British and Spanish ones," he said.

He pointed out that Italian families have low levels of debts, owning consistent financial assets instead.

"In Italy, the average financial wealth amounts to 350,000 euros (some $476,000 ), while the average debt is 75,000 euros (some 102,000 dollars)," he said, adding that the banking system is solid as well.

Italian banks are well capitalized and operating according to a commercial business model, and they do not own toxic assets, the general director said.

Sabatini stressed that Italy's real challenge is resuming growth. "as such a high stock of public debt needs a higher growth rate in the medium and long period in order to be paid off."

The ABI and leading entrepreneurial associations had earlier elaborated a plan containing concrete proposals aimed at funding families and enterprises, he said, "because these are the wheels of growth."