The Euro – It’s Up to Italy Now

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Italian Prime Minister Mario Monti

In a 10bn euro ($13bn; £9bn) auction of treasury bills, Italy has been forced to pay record high interest rates.

The rate of interest for the new debts due to be repaid in six months was 6.504%, compared with 3.535% in the last comparable sale on 26 October.

The rate for two-year borrowing was 7.814%, up from 4.628% last time.

Italy’s cost of borrowing has risen consistently over the last three weeks.

Depending on what Italy does, the single currency Euro, of which Italy is one of the founding members, could break up. Italian Prime Minister Mario Monti said that will not happen and he will balance the budget as he seeks further austerity measures.

On Thursday, Eu Economic and Monetary Affairs Commissioner Olli Rehn told journalists that “Ahead lies either the slow disintegration of the euro area or a significant strengthening of the monetary union.”

BBC

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