MNI BRIEF: Fiscal Policy Key Against Market Fragmentation- BOI

Sound fiscal policy will be a key element in avoiding market fragmentation in the eurozone in a shared effort with the European Central Bank using its existing instruments or “new ones” if borrowing costs increase in individual jurisdictions to levels “not justified by fundamentals,” Bank of Italy governor Ignazio Visco.

The “full success of monetary policy will also depend on the shared commitment, in facts, proposals and requests of budgetary interventions to keep public debt on a path to continue to ensure full sustainability,” Visco said in his speech Friday at the annual meeting of the Italian Banking Association.

Visco noted the need for structural reforms in remarks that could be seen the BOI’s view on possible conditionality of any anti-fragmentation tool the ECB is designing. (MNI SOURCES: ECB Focussing On Conditions For New Crisis Tool)