Italy's Deputy Prime Minister Luigi Di Maio has said his country has no plans to leave the single currency, but will not change the target of the 2019 budget deficit despite the European Commission's refusal.
Di Maio, the leader of the 5-star movement, said the government is monitoring the banking system, which is under pressure from higher government bond yields.
Di Maio said markets were not concerned about Italy's lack of respect for EU budget rules, but were concerned about the false news that Italy would leave the euro and the European Union. He also noted that the target of the 2019 budget deficit of 2.4% of GDP should not be changed.
Financial markets reacted negatively to Italy's expansionary budget as bond yields rose to their highest level in several years as investors worried about Italy's defiance of European Union financial rules and debt sustainability, the highest level in the euro area after Greece.
Italy's economy minister Giovanni Tria said yesterday that rising debt costs in Italy could hurt the value of its large sovereign assets.
In the coming weeks, the Italian budget will be discussed with the EU and it will be possible to read the details of the Italian government's financial plan, Italian Deputy Prime Minister Di Maio said.
