Germany told Italians on Wednesday they must accept Prime Minister Mario Monti’s tough economic measures to avoid becoming the next victim of the euro zone debt crisis after a bailout for Spain’s banks failed to calm markets.
“If Italy continues along Monti’s path there will be no risks,” German finance minister Wolfgang Schaeuble said.
Highlighting that peril, the euro zone’s third biggest economy had to pay nearly 4% to sell one-year treasury bills at auction on Wednesday, a six-month high, due to fears about its ability to keep servicing its debt mountain.
Italy’s 1.9 trillion euro ($2.4 trillion) public debt is equivalent to 120% of gross domestic product, a ratio second only to Greece. A month ago, Rome had paid just 2.34% on one-year paper.