A loss of market access would force Italy to ask for outside help or start printing its own currency and both would be very problematic scenarios as in any case, Euro-area break-up fears would balloon and markets would go into a crisis mode, suggests Jan von Gerich, Analysts at Nordea Markets. Key Quotes “Italian assets have been hammered in the past few days. The daily moves in bond yields have actually been larger than at any time during the euro era, including the euro crisis. The rapid loss of market confidence has raised risks that Italy could lose bond market access altogether. While such risks are not close to being realized yet, they are real and it makes sense to consider the vast consequences the loss of market access would have.” “The only actor with enough fire power to calm the situation is the ECB. It has been buying bonds under its asset purchase programme, and has some inbuilt flexibility in allocating the purchases. However, the monthly purchase volumes have already come down from the highs of EUR 80bn to EUR 30bn.” “Alternative would be to print new currency If Italy refused to implement an adjustment programme and was denied ECB help, it would in practice be forced to have a plan B, or starting to print its own currency. The government could simply default on its debt, but its banking system could not survive a government default without ECB support (which would not be given to a country in default without an adjustment programme).” “Markets could panic big time The Italian economy is roughly ten times as large compared to Greece. Considering the worries caused by Greece, it is not difficult to imagine the damage Italy could do. If Italy lost market access – not our baseline scenario – concerns about the break-up of the Euro area would intensify severely. The euro currency would take a beating, Euro-area equity markets would tumble, German bonds would rally strongly and severe pressure would spread from Italian to other Euro-area bond markets. The ECB would have its hands full in trying to fight contagion. The Euro area could survive an Italian exit only if both the ECB and the governments in the other Euro-area countries were determined to do whatever it takes to save the euro.” FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next Germany: Annual Harmonized CPI up 2.2% in May FX Street 5 years A loss of market access would force Italy to ask for outside help or start printing its own currency and both would be very problematic scenarios as in any case, Euro-area break-up fears would balloon and markets would go into a crisis mode, suggests Jan von Gerich, Analysts at Nordea Markets. Key Quotes "Italian assets have been hammered in the past few days. The daily moves in bond yields have actually been larger than at any time during the euro era, including the euro crisis. The rapid loss of market confidence has raised risks that Italy could lose bond market… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.