These loans, however, would increase their public debt. Direct intervention is envisaged only once the Single Supervisory Mechanism is fully operational. The implementing details are now being finalized. * * * The problems of the Italian economy stem from long-neglected structural weaknesses. They have been exacerbated by the global financial crisis and the European sovereign debt crisis.
First, while corporate bond funds were generally able to meet increased redemptions, their response to outflows added to selling pressures and the broader demand for cash, thereby amplifying liquidity stress in financial markets. Existing crisis management tools were not effective in slowing down the outflows or mitigating the impact of asset sales on underlying markets.