The European Central Bank said in its
Financial Stability Review on Thursday that if highly indebtedly
countries like Italy loosen their fiscal policies, this could
affect "market sentiment towards some euro area sovereigns".
The review also stressed, however, that "the euro area is
more resilient and better prepared to weather possible financial
shocks coming from the international environment".
It added that the the improved macro economic outlook has
benefited euro area sovereign financing costs.
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