A
draft reform of the fund, known as the European Stability
Mechanism or ESM, was agreed on by euro zone finance ministers
in June and is due to be finalised by their leaders next month.
But Italy, with a public debt equivalent to 135% of its gross
domestic product, is concerned about proposals that would make
it easier to restructure sovereign bonds in the event of a
financial crisis.
The parties - and other institutions - are arguing over whether
Rome should try to block the reform at the EU level.
Conte said on Tuesday that Italy would only approve the reform
if it was part of a broad package of changes, while Italian
media have said the government may seek to delay and eventually
veto the reform.
"We haven't struck an accord yet. There will be other meetings,"
Luigi Marattin of the Italia Viva (Italy Alive) party told
reporters at the end of a meeting with Prime Minister Giuseppe
Conte over the issue.
"I do not think there will be a delay, we'll certainly find a
common agreement."
He said Italy's main concern was to make sure that sovereign
bonds do not lose their status as risk-free assets.
Italy's public debt is proportionally the highest in the euro
zone after that of Greece, and its sustainability is often
questioned at times of rising bond yields. If its sovereign
bonds are no longer treated as risk-free, yields would almost
certainly climb.
Italy's banking lobby ABI said this week that if the ESM reform
or other changes to current rules worsened market conditions,
lenders "will buy fewer Italian sovereign bonds", which would
drive yields higher.
At the end of September, Italian banks held around a sixth of
the national debt - some 400 billion euros ($440 billion).
(Reporting by Giuseppe Fonte; Writing by Giselda Vagnoni;
Editing by Hugh Lawson)
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