European Central Bank chief Christine Lagarde was supposed to reassure markets by announcing anti-crisis measures to take on COVID-19 but caused a spike in Italian bonds yields instead, triggering harsh reactions in Italy.
Lagarde said it is not the ECB’s role “to close spreads” in government debt markets, rejecting the legacy of her predecessor Mario Draghi who said during the 2012 debt crisis that the European bank would do “whatever it takes to preserve the euro”.
After Lagarde’s shattering comments, Milan’s stock exchange fell 16.9%, the biggest single-session drop since the index was created in 1998.
Italian bond yields also had the biggest one-day jump ever, increasing Italy’s cost of borrowing money while the country is facing Europe’s worst coronavirus outbreak.
In an unprecedented reaction, Italian President Sergio Mattarella blasted Lagarde, saying that Italy showed other countries the way to halt the spread of coronavirus, so Italians expect solidarity from the EU institutions, not “moves that can hinder Italy’s actions”.
Prime Minister Giuseppe Conte also said in a statement that the job of the central bank should be not to hinder but help measures to combat the health emergency effectively by creating favourable financial conditions.
“We are faced with a global pandemic, we have put in place every necessary intervention and the ECB must do the same, using all the instruments necessary to calm the spread,” said Riccardo Fraccaro, secretary of Conte’s cabinet. (Gerardo Fortuna | EURACTIV.com)