GETTY Ignazio Visco Governor of the Banca d'Italia

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Ignazio Visco, the Governor of the Bank of Italy, attacked the EU’s regulatory regime on Italy’s struggling banks for contributing to the crisis which engulfed the country this year. Banks including the oldest bank in the world, Monte dei Paschi di Siena, as well as two regional banks in Veneto, and four small banks in central Italy, veered towards collapse as a result of alleged poor management after being overwhelmed by unpaid loans. After the eurozone’s worse than expected recovery after the 2008 financial crisis, Italy struggled to shift its huge debt burden, compounded by a weak banking system and a generally weak economy. Italy was forced to fight earlier this year after DBRS, a Canadian rating agency, downgraded Italy’s sovereign debt, stripping the country of its last A rating.

The downgrade meant that government bond-yields rose and the cost of funding for Italian banks in the coming months fell on the government. The country then received huge fiscal support from the eurozone, notably Germany, and the country now faces increased scrutiny over how its banks were supported by this money after the 2008 financial crisis. The Governor was forced to defend himself today over accusations of negligence over the collapse of the banks in central Italy during a grilling by the Italian Parliament. Mr Visco argued that the intervention from Brussels to use eurozone public funds to support Italy’s banks after the global financial crisis curtailed Italy’s ability to respond to macroeconomic conditions.

GETTY EU has been blamed for plunging the Italian economy into crisis

He said: “These choices did not help to make the management of banking crises in our country more speedy or effective.” The governor continues to deny his poor supervision played a role in the collapse of several banks that required £11.5bn (€13bn) worth of bailouts. He told a panel of MPs: “In more than 120 years of our history the honesty and integrity of the Bank of Italy’s staff has never been found lacking. “The marked deterioration of banks’ assets and the crises of recent years were above all the inevitable consequence of the deep, double-dip recession that hit the Italian economy. It was not inattentive supervision that determined the evolution of the Italian financial system, but the worst economic crisis in the history of our country.”

GETTY Banks in central Italy have veered towards collapse

However, during yesterday’s hearing Economy Minister Pier Carlo Padoan admitted the Bank of Italy could have done a better job in supervising the country’s banking sector while numerous lenders collapsed and thousands of savers lost their money. But Daniele Capezzone, an opposition centre-right MP of the European Conservatives and Reformists, said the government has not done to enough to deal with the deeper problem. Mrs Capezzone accused the government of using “expensive Band-Aids” but not addressing the real problem. Youth unemployment in Italy is also one of the worst among developed countries and peaked at 43 percent in 2014.

GETTY Pier Carlo Padoan Minister of Economy and Finance of Italy