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Interview: Why Italy's December referendum is not 'Brexit'

chinadaily.com.cn | Updated: 2016-10-24 11:11

3. How do you expect it to affect the European Union? Will it be an unsettling factor to the EU, as some fear?

I don't see any potential unsettling consequences in this referendum with regard to the EU. And this link, to the UK experience, is totally misleading.

This is a referendum on a suggested update of the institutional system, which has already been approved by almost 60 percent of the MPs on April 12.

4. How do you expect the referendum will affect China-Italy relations?

It would not have direct consequences, as again it regards our internal political structure. But this is part of a comprehensive reform strategy designed by the current government to improve the efficiency of the Italian institutional and administrative system and the competitiveness of the Italian economy. As largely stressed in the latest G20 summit and in bilateral meetings between Premier Renzi and President Xi Jinping, structural reforms are the main driver to sustain potential growth over the medium term.

Italy's reform strategy touches upon the labor market, fiscal sustainability, public administration, and financial and judicial systems in order to create the conditions for a friendlier environment for business and growth. Streamlining the legislative process is a relevant part of this strategy, and this is what the next referendum is about.

The government has also crafted an innovative scheme of public guarantees for securities in order to revitalize the market. The government has endorsed the inception of Fondo Atlante, a wholly private initiative that will help a market solution for the disposal of the bad loans in banks' balance sheets and provide a backstop to guarantee the success of banks' recapitalization. Let me stress that both initiatives are market instruments fully compliant with European regulation.

According to the government's estimate, all combined these reforms should increase GDP by 3 percent by 2025 and above 7 percent in the long run.

Let me finally correct what I've read in some reports about Italy's financial system. In particular, some biased reports on the size of the so-called "bad loans": they amount to $85 billion, not the $365 billion to which reference is often made, with existing coverage of up to $122 billion.

This summer's stress test conducted by the ECB showed that the Italian banking system is solid. It is not in a systemic crisis situation and is not a source of vulnerability for other banking systems. The weaknesses of the Italian banking system are similar to those revealed by other European banks. Banca Intesa, on the contrary, has performed better than the European average. Worse than Italian ones are Austrian and Irish banks. But even Deutsche Bank, one of the largest banks in the world, and Commerzbank, have obtained modest results.

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