GETTY Italy's banking crisis is threatening the eurozone

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Fears for both the Mediterranean country and Europe’s entire financial infrastructure have increased dramatically since Britain's vote to leave the European Union (EU).



International finance experts believe Italy's problems could spread across the single market in a domino effect that would cripple the EU.



Milan's top stock market is still down by a massive 12 per cent from its pre-referendum high, after the result prompted investors to dump stocks at alarming speed.



The biggest concern is the stability of Italian banks, which hold around £270billion of bad loans that could end up defaulting.



Brexit has thrown the problem into the spotlight as economic growth prospects for the eurozone have plunged.



Britain’s vote to leave the EU also meant interest rates are set to stay lower for longer and returns - or yields - on government debts have moved lower - all of which hurt banks' profitability.

Yahoo Italian's top stock market has not recovered from its Brexit sell-off

Michael Hewson, chief market analyst at CMC Markets UK, told Express.co.uk: "Now that Brexit is in rear view mirror it has shone a light in the significant problems in the European banking system.



"EU leaders are experiencing a “rabbit in the headlights” moment."



He said: "At the beginning of this year European banks were already facing a host of problems, including falling profits, a slowing global economy and negative rates reducing their ability to boost their profitability, at a time when a lot of them were being encouraged to boost lending to the wider economy as well as improve their capital buffers.



"Quite simply it isn’t possible to do all of them at the same time.



"You have a poisonous cocktail that has the potential to bring Europe’s banking system to its knees, and for now it would seem that policymakers have no idea as to what can be done to deal with it."

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The director-general at the Italian Treasury Lorenzo Codogno has also raised his concerns.



He told the Wall Street Journal: "Brexit could lead to a full-blown banking crisis in Italy.



"The risk of a eurozone meltdown is clearly there is Brexit concerns are not immediately addressed."



The European Central Bank is running out of measures it can take to deal with the escalating financial problems of the bloc.



The institution has slashed interest rates to negative levels this year in a bid to kickstart economic growth - even though this puts further pressure on Europe's banks.



And announced an extension of its money printing programme.



The Bank's chief Mario Draghi has called on political leaders to help fix the underlying economic problems.