LONDON (Reuters) - The European Commission and Italy are in intensive talks to try to avoid financial market tensions escalating and causing contagion in other highly indebted euro-zone countries, the Commission’s head of financial stability said on Tuesday.
“The real issue is in the famous doom loop between the sovereign and the banking system,” Olivier Guersent, the Commission’s Director General for Financial Stability said at a Financial Times banking conference.
“My colleagues Valdis Dombrovskis and Pierre Moscovici are in quite intensive talks with the Italian authorities,” he said referring to Commission Vice President and the EU Commissioner.
“The (Italian) government realizes (the issues) and that there is no interest in creating a situation that is difficult for the banking system and there is an issue of contagion in general with the rest of the euro zone.”
Reporting by Marc Jones; editing by Josephine Mason