MILAN Dec 7 The Bank of Italy's liabilities
towards other euro zone central banks rose to a new record high
in November as Italians invested abroad and political
instability kept foreign investors away.
The Bank of Italy's position within the Target 2 system,
which settles cross-border payments in the euro zone, is
monitored because its rising can indicate financial stress.
Bank of Italy data showed the Target 2 balance rose to 358.6
billion euros ($384.5 billion) in November from 355.5 billion
euros in October.
It has risen by 129 billion euros in the 12 months through
November and it stands well above a 289 billion euro peak
reached in August 2012 at the height of the euro zone crisis.
At the time, capital flight drove the Target 2 balance
higher as foreign investors dumped Italian government bonds and
withdrew their funding to Italian banks.
Economists have said political instability in Italy ahead of
a Dec. 4 referendum that prompted Prime Minister Matteo Renzi to
resign has dampened foreign demand for Italian assets.
According to The Bank of Italy, the rise witnessed in recent
months mainly reflects changes in the investment portfolios of
Italian households, as record-low government bond yields
encourage them to invest in foreign assets. ($1 = 0.9327 euros)
(Reporting by Valentina Za, editing by Isla Binnie)