MNI BRIEF: Mid-East Crisis Could Impact Credit Quality - Visco

The ongoing crisis in the Middle East could have an impact on the ability of Italian lenders to service debts, Bank of Italy’s governor Ignazio Visco said on Wednesday, as he recommended Italian banks practice prudence and maintain high levels of reserves and provisions.

The levels of deteriorating loans could rise, Visco said, although without hitting levels seen in the recent past, Visco told the Italian Banking Association (ABI), noting “extraordinary" geopolitical risks.

Visco also highlighted the ongoing central bank debate folowing recent developments in US Treasuries yields over the possibility that the natural interest rate across developed economies could have risen from levels between 0 and 1 to levels closer to 2%, although he offered no opinion.