{"id":40856,"date":"2018-11-23T07:24:53","date_gmt":"2018-11-23T12:24:53","guid":{"rendered":"http:\/\/olduvai.ca\/?p=40856"},"modified":"2018-11-23T07:24:53","modified_gmt":"2018-11-23T12:24:53","slug":"qe-created-dangerous-financial-dependence-italy-hooked-withdrawal-next-ecb-warns","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=40856","title":{"rendered":"QE Created Dangerous Financial Dependence, Italy Hooked, Withdrawal Next, ECB Warns"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"https:\/\/wolfstreet.com\/2018\/11\/22\/qe-created-dangerous-financial-dependence-italy-hooked-withdrawal-next-ecb-warns\/\">QE Created Dangerous Financial Dependence, Italy Hooked, Withdrawal Next, ECB Warns<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>\u201cWho will purchase the \u20ac275 billion of government debt Italy is to issue in 2019?\u201d<\/strong><\/p>\n<p>The ECB, through its army of official mouthpieces, has begun warning of the potentially calamitous consequences for Italian bonds when its QE program comes to an end, which is scheduled to happen at the end of this year.<\/p>\n<p>During a speech in Vienna on Tuesday, Governing Council member Ewald Nowotny <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2018-11-20\/ecb-officials-warn-qe-exit-could-spell-trouble-for-italy-s-debt\" target=\"_blank\" rel=\"noopener\">pointed out<\/a> that Italy\u2019s central bank, under the ECB\u2019s guidance, is the biggest buyer of Italian government debt. The Bank of Italy, on behalf of the ECB, has bought up more than \u20ac360 billion of multiyear treasury bonds (BTPs) since the QE program was first launched in March 2015.<\/p>\n<p>In fact, the ECB is now virtually the only significant net buyer of Italian bonds left standing. This raises a key question, Nowotny said: With the ECB scheduled to exit the bond market in roughly six weeks time, \u201cwho will purchase the roughly \u20ac275 billion of government securities Italy is forecast to issue in 2019?\u201d<\/p>\n<p>With foreigners <a href=\"https:\/\/money.usnews.com\/investing\/news\/articles\/2018-11-20\/dearth-of-italian-bond-deals-flashes-long-term-debt-danger\" target=\"_blank\" rel=\"noopener\">shedding<\/a> a net \u20ac69 billion of Italian government bonds since May, when the right-wing League and anti-establishment 5-Star Movement took the reins of government, and Italian banks in no financial position to expand their already bloated holdings, it is indeed an important question (and one we\u2019ve been asking for <a href=\"https:\/\/wolfstreet.com\/category\/everything-but-the-kitchen-sink\/europe\/europe-italy\/\" target=\"_blank\" rel=\"noopener\">well over a year<\/a>).<\/p>\n<p>According to former Irish central bank governor and ex-member of the ECB\u2019s Governing Council Patrick Honohan, speaking at an event in London, when the ECB\u2019s support is removed, \u201cthe yield on Italian government bonds will be much more vulnerable.\u201d<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>QE Created Dangerous Financial Dependence, Italy Hooked, Withdrawal Next, ECB Warns \u201cWho will purchase the \u20ac275 billion of government debt Italy is to issue in 2019?\u201d The ECB, through its army of official mouthpieces, has begun warning of the potentially calamitous consequences for Italian bonds when its QE program comes to an end, which is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,5660,233,282,23183,23182,2491,1464,661,662,4255],"class_list":["post-40856","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-don-quijones","tag-ecb","tag-european-central-bank","tag-ewald-nowotny","tag-financial-dependence","tag-government-bonds","tag-italy","tag-qe","tag-quantitative-easing","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40856","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=40856"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40856\/revisions"}],"predecessor-version":[{"id":40857,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40856\/revisions\/40857"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=40856"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=40856"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=40856"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}