“We could find ourselves in a situation where we are not the ones taking the decision [to leave the euro], but others do that,” European Affairs Minister Paolo Savona told lawmakers in Rome this morning, adding that “we need to be prepared to face such a shock.”
While Italian bond yields blipped higher and then retraced on the headlines, Italian bank stocks were hit hard and are back at one-week lows now…
EURUSD is fading but not specifically on these headlines.
However, what is of note is the fact that Italian redenomination risk remains significantly elevated – having ignored any normalization seen in other assets since Italy’s crisis exploded (and the Italian Central Bank bought a record amount of BTPs to save the perception of markets)…
Perhaps the realization of “fiscal money” is closer than many would like to believe.
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