According to information unearthed by the Financial Times, Italy is at risk of losing billions of Euros on derivative contracts restructured at the peak of the ongoing fiscal crisis in the Eurozone.
The Financial Times has based its information on a lengthy, confidential report put together by the Rome Treasury.
The report states that eight derivative contracts with foreign banks, with a total notional value of 31.7 billion Euros, were restructured to allow the Treasury to space out payments owed to foreign banks. Although this gave Italy more time to gather the funds, the terms of the restructures were often less advantages in the long term.
Although the report does not reference specifics, such as how much Italy could potentially lose, it implies that the original contracts date back to the end of the 1990’s, as Italy was preparing to enter the Eurozone and European Central Bank President Mario Draghi was director-general of the Italian Treasury.
The Corte dei Conti, the state auditors of Italy, requested the report earlier this year and concern over the figures apparently drew the attention of the nation’s financial police.
Experts consulted by the Financial Times have estimated that the Treasury could be facing a potential loss of roughly 8 billion Euros.
Although no officials have issued comment regarding the report, Italy’s former Finance Minister Giulio Tremonti has stated that the EU was aware of and gave its approval to Italy’s utilisation of derivatives prior to its entry to the Eurozone.
In other Eurozone news, the latest data has shown that French GDP met estimates for the first quarter of this year.
Meanwhile, consumer confidence in Germany jumped from 6.5 to 6.8 – economists had expected the index to hold at its previous level.
After declining against the US Dollar yesterday following the publication of some better-than-forecast economic data for the North American nation, the Euro was little changed this morning.
Euro (EUR) Exchange Rates
As of 09:00 –
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3068 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8478 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4059 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6872 <
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3685 <