Berlusconi says Italy may be forced to leave the euro zone

ROME Tue Dec 18, 2012 3:37pm EST

Former Italian Prime Minister Silvio Berlusconi smiles as he arrives to attend the book launch of his friend, TV presenter Bruno Vespa, in Rome December 12, 2012. REUTERS/Tony Gentile

Former Italian Prime Minister Silvio Berlusconi smiles as he arrives to attend the book launch of his friend, TV presenter Bruno Vespa, in Rome December 12, 2012.

Credit: Reuters/Tony Gentile

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ROME (Reuters) - Former prime minister Silvio Berlusconi said on Tuesday Italy would be forced to leave the euro zone unless the European Central Bank gets more powers to ensure lower borrowing costs.

Berlusconi, who announced this month he will again lead his People of Freedom party (PDL) in a national election expected in February, said on a talk-show on state broadcaster RAI that the ECB should become a lender of last resort for the currency bloc.

"If Germany doesn't accept that the ECB must be a real central bank, if interest rates don't come down, we will be forced to leave the euro and return to our own currency in order to be competitive," Berlusconi said in comments reported by Italian news agencies Ansa and Agi.

The 76-year-old media tycoon has made similar remarks in the past about the possibility of Italy, or even Germany, leaving the euro, but has often at least partially rectified them later.

Berlusconi is already campaigning hard for the election with a spate of television interviews in an attempt to close the wide gap with the center-left Democratic Party which is polling at above 30 percent, some 14 points above the PDL.

Berlusconi was forced to resign as prime minister in November last year as Italian bond yields surged at the height of the euro zone debt crisis.

(Writing by Gavin Jones; Editing by Stephen Powell)

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Comments (2)
dareconomics wrote:
People like to think that Berlusconi is a joke because of all the scandals swirling around him. Remember that he is smart enough to be a billionaire and five-time prime minister of Italy. Throughout his life, he has shown that he is very savvy.

His party is currently behind the Democratic Left by 16 points in third place, so another term as Prime Minister does not appear to be likely at this juncture. Count him among those who think he has a chance. He has already begun negotiating to have the ECB become a buyer of last resort for sovereign debt like a “real central bank.”

While Germany holds the purse strings, it happens to be the country who would lose the most if the eurozone began breaking up. If Italy leaves the eurozone, it would instantly devalue its entire debt load with its products becoming very competitive on world markets. The euro would strengthen leaving Germany with a less competitive currency and a higher real value for its debt.

The Greek government should be negotiating in a similar fashion. Their take-it-or-leave-it offer to the troika should be “forgive the debts or be paid back in drachmas.” I predict that this will be the plan once Greece elects a new government.

dareconomics.com

Dec 18, 2012 6:58pm EST  --  Report as abuse
scythe wrote:
Former prime minister Silvio Berlusconi said on Tuesday he
would be forced into celibacy
if he lost the election …..

reporting berlusconi’s dumb-ass knee jerk attempts to save his career
won’t help the dollar
and won’t hurt the euro

Dec 19, 2012 2:28am EST  --  Report as abuse
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