Economic outlook 'daunting'

Global economic and market conditions are worrying and a renewed slowdown could threaten the sustainability of public debts in Europe and elsewhere, Bank of Italy Governor Ignazio Visco said on Saturday. "The European and global economic outlook and financial market conditions are daunting," Visco said in a speech to the Council for the United States and Italy in Venice.
"A new global economic slowdown would pose additional risks to already fragile financial systems and threaten the sustainability of public debts, in Europe and elsewhere," he said. He added that the political deadlock in Greece and difficulties in the Spanish banking sector were aggravating tensions in markets and increasing uncertainty. Euro zone finance ministers were due to meet on Saturday to discuss a bailout of Spain's banks, lumbered with bad debts from a burst property bubble.
Visco urged leaders of G20 countries and emerging economies to pursue policies aimed at boosting growth. He said support from monetary policy, such as the European Central Bank's cheap 3-year loans which helped calm markets earlier this year, was also essential but only temporary.
Visco said the crisis that has plunged Italy into recession and that sent its borrowing costs spiralling to record levels last year was still serious and urged Mario Monti's government to press on with economic reforms. "For Italy, the emergency is not over," Visco said. "Preserving and sustaining fiscal responsibility is essential, even if at the cost of some short-run difficulties," he said. Visco, who is also a member of the ECB's Governing Council, reiterated his call for common oversight of Europe's banks, even if it means "a shift of some elements of national sovereignty."