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ROME, Dec 21 (Reuters) - Italy's lower house of parliament approved on Wednesday a government request to borrow up to 20 billion euros ($20.8 billion) to underwrite the country's fragile banking sector, which is weighed down by bad loans.
The Treasury is widely expected to have to step in later this week to save Italy's third largest lender, Monte dei Paschi di Siena, from collapse, and needed parliamentary authorisation to take on new debt to cover the operation.
Government sources say the 20-billion-euro-rescue fund will also be used to prop up several other banks and help guarantee liquidity in the banking system.
$1 = 0.9618 euros Reporting by Giuseppe Fonte; Writing by Crispian Balmer