PARIS (Reuters) - French Finance Minister Pierre Moscovici voiced confidence in Italy’s future reform path on Monday despite a new political crisis, forecasting that ex-premier Silvio Berlusconi would not return to power.
“The direction that Italy has been going in for the last year and a half is a solid direction, there is no reason to worry,” Moscovici told Reuters in an interview.
“Berlusconi is returning to politics but I‘m convinced that he will not return to power,” he said.
Italian Prime Minister Mario Monti said on Saturday that he would stand down once the 2013 budget is approved, after losing the support of Berlusconi’s center-right PDL, the largest party in parliament. Berlusconi said he would run for office again.
Monti’s announcement sparked fears Italy could stray from the path of economic reform after general elections which are now expected to be brought forward to February. The euro fell on Monday and Italian shares and bond prices tumbled.
“We continue to have confidence in Monti’s government and our Italian partners,” Moscovici said, adding that “questioning” in financial markets was normal during an electoral period.
Berlusconi was forced to resign last year during a ballooning euro zone debt crisis that had pulled Italy into its vortex while his government put off needed reforms, and amid a sex scandal involving his “bunga bunga” parties.
Moscovici said that it was not necessarily a bad thing that Berlusconi had provoked the latest political crisis. “He is not the worst opponent that the progressive or simply serious forces could have.”
The new political crisis risks reigniting tensions in Europe’s debt crisis, after a recent lull thanks in part to leaders’ pledge to build a banking union with a European Central Bank-led supervisor.
EU finance ministers, who are to due to discuss bank supervision on Wednesday, have been at odds over how the mechanism should be structured and how much power the European Central Bank should have.
“The outline of a solution is on the table, but for that all banks must be supervised and the ECB must have supervisory powers either directly or indirectly,” Moscovici said.
He said he understood German concerns about losing oversight of the savings banks and said that the ECB’s supervisory powers should reflect that.
“We can envisage degrees of supervision depending on banks’ size, but on one condition - that in the end the European Central Bank holds the ultimate responsibility,” he said.
Reporting by Jean-Baptiste Vey; Writing by Leigh Thomas; Editing by Mark John and Susan Fenton