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Free AccessMNI INTERVIEW: ECB NPL Rules May Hit Italy Econ- Confindustria
--Market News Exclusive Interview With Confindustria Head
--New ECB Rules On NPLs Could Stifle Credit Flows
--EMU Reform Should Boost Governance, EU FinMin A Good Move
By Silvia Marchetti
ROME (MNI) - Tougher European Central Bank rules on bad loan risks stifling
credit flows to the real economy and a more restrictive monetary policy ahead
could jeopardise growth, Vincenzo Boccia, president of Italy's leading industry
lobby group told Market News in an exclusive interview.
Boccia, head of Confindustria, warned that the end of the ECB's asset
purchase program, topped with a less accommodative stance, could hinder the
ongoing economic recovery if such risk is not adequately offset by strong
national and European initiatives.
"This is also the reason why public deficits and debt must be kept under
control by focusing on growth to reduce their burden on public finances," said
Boccia.
The introduction of new rules on non-performing loans (NPLs) must be
averted because, if applied, "they will trigger an investment crunch, a move in
the opposite direction to the one we need to go now," he said.
Boccia argued that the creation of a common European Union capital market
would benefit credit flows, but that sustainable growth remained the "great
precondition" to boost lending to both business and households.
"Credit support, especially to small and medium enterprises, must be a top
priority for Italian and European policy. We need to favour the real economy,
that creates wealth and employment," he said.
If this goal is missed, "nobody should be surprised if there are waves of
estrangement and delusion in the great European dream," Boccia said.
--KEEP REFORMS ON-TRACK
The head of Confindustria, a lobby group for some 160,000 firms, was
confident that Italy was finally out of the recession tunnel but warned against
making policy mistakes if the country wanted to accelerate the ongoing economic
recovery.
Boccia appealed to Italy's politicians, currently caught up in campaigning
as the country heads towards general elections in March, to keep pro-growth
reforms in place no matter who wins.
"We are facing a delicate moment and must call on everyone's sense of
responsibility. It is paramount not to undo all policies and reforms which have
determined today's successes, including the Jobs Act and the Industry 4.0 law,"
he said.
Confindustria last week upped its GDP forecasts to 1.5% for 2018, up from a
previous 1.3%, and to 1.2% in 2019.
He didn't rule out the chance of an uncertain electoral outcome due to a
"fragmented political picture" likely to emerge from the ballot boxes. However,
he said he was confident that as in the past, Italy "will succeed in finding a
solution to assure stability and governability".
--EUROZONE REFORM WELCOME
Boccia welcomed the eurozone reform plan launched by the European
Commission, especially if it helps boost governance and introduce permanent
pro-growth pillars.
"Let's not forget that Europe is the world's richest market. This is why we
must exploit growth to reduce social inequalities and fight poverty," he said.
Europe must also put in place ambitious policies to support the rise of new
"industrial champions" able to successfully compete on world markets.
The idea of creating a European Finance Minister is positive, said Boccia,
provided it leads to greater convergence in fiscal policies across member states
and to a more efficient EU policy framework.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: M$E$$$,M$I$$$,M$X$$$,MC$$$$,MI$$$$,MX$$$$]
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.