STAFF NEWS & ANALYSIS
The Real Reason for Government Banking Solutions
By Daily Bell Staff – December 27, 2016
This is a bad season for banking around the world and especially in Italy where major banks are under water.
Central banks are supposed to protect banks but who really believes that? In the modern era especially central bank protection has often involved government refinancing.
From the point of view of central banking, the health of the whole system is more important than the health of an individual component. That’s one reason why Italy’s oldest bank was just bailed out.
The bank, Monte dei Paschi di Siena, is being bailed out by the italian parliament which has put aside up to 20 billion to ose as necessary. However the parliament dearly hopes it won’t cost so much.
The bank had found up to 2.5 billion in private and institutional funds.