By Dow Jones Business News,
December 22, 2013, 06:32:00 AM EDT
ROME--Italians "should learn from history" and abandon chatter about leaving Europe's monetary union, the chief
economist of the European Central Bank said in an interview published Sunday by Turin daily La Stampa.
"The euro is irreversible. Those who dream of the world before the euro tend to forget what it was really like," Peter
Praet told the paper.
Political movements that exploit anti-euro rhetoric could win the support of up to half of Italian voters, according
to recent polls.
The Five-Star Movement, a new political party that won a quarter of the votes in February's general elections, has
called for a referendum on keeping the euro. Two other parties, including former Prime Minister Silvio Berlusconi's
Forza Italia, regularly denounce the single currency for hobbling Italy's economy.
The economy stopped contracting in the third quarter after a two-year recession and there are "signs of
hope...although there are also downside risks, especially if intended reforms are abandoned," Mr. Praet is quoted as
The ECB "will be ready to act" if credit flows in the euro zone tighten and put a nascent recovery in jeopardy, he is
reported as saying.
Loans destined to fund investments are particularly important, he said. Business investments in Italy have fallen more
sharply than elsewhere in Europe, in part due to the small number of larger companies available to tap funding from
capital markets instead of relying on banks, he told the paper.
He said Italy's policy reaction to the past few years of economic turmoil has primarily been to raise taxes rather
than to liberalize labor laws, the newspaper reports.
He said even if an Italian government did decide to run the risk of leaving the euro, it would cause havoc in the
economy and vast amounts of legal disputes over existing debts, the paper reports.
"Monetary solutions are never real ones," he is quoted as saying.
Full story: http://www.lastampa.it/2013/12/22/economia/peter-praet-litalia-al-punto-di-svolta-uscire-dalleuro-un-
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(END) Dow Jones Newswires
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