(Corrects paragraph 4 to show Balls said California issued parallel currency after 2008, not in 2008)
LONDON, Nov 21 (Reuters) - The possibility of Italy defaulting on its debt is unlikely but cannot be ruled out altogether, a senior official at the world’s biggest bond investor said on Wednesday.
PIMCO’s chief investment officer for global fixed income, Andrew Balls, said the issuance of a parallel currency or redenomination to the Italian lira were more plausible scenarios.
“Italian sovereign default is unlikely but it is not a zero probability. The more plausible scenario is a combination of issuing a parallel currency or even redenomination,” he said at a conference in London.
“California issued a parallel currency after 2008 so if it could happen there it is not obvious it couldn’t happen in Italy.”
Balls said that it makes sense to be underweight France and European credit in general in case of a full-blown crisis in Europe. He added that he does not see great scope for the European Central Bank to raise interest rates in 2019. (Reporting by Virginia Furness, Writing by Abhinav Ramnarayan, Editing by Tommy Wilkes)