Italy Looks to Spain When Planning Bank Reforms

With most of Europe still in the throes of economic crisis, the Italian government is considering reforms to its banking sector. Though banking problems in other eurozone countries have been caused by financial bubbles, challenges in Italy's banking sector stem primarily from economic stagnation: There has been a fall in supply and demand for loans and an increase in default rates. In late January, Rome introduced a decree to reform the country’s cooperative banks, and on Feb. 4 the government admitted to a journalist that it was planning to address the rising number of non-performing loans. However, if other economic factors such as unemployment are not addressed, the measures could have little effect.