Italian Prime Minister Mario Monti, signaling the worst may be over for the euro regionâ€™s most distressed bonds, said he expects leaders to strike a deal by the end of the month on expanding a debt-crisis firewall.
While German Chancellor Angela Merkel has expressed reluctance to discuss increasing the size of Europeâ€™s bailout kitty at a European Union summit in Brussels beginning today, Monti said heâ€™s â€œconfidentâ€ a deal will come.
â€œSize matters,â€ said Monti in an interview yesterday at the prime ministerâ€™s 16th-century residence in central Rome. â€œIf the approach to firewalls is constructive enough in Europe, I believe we will all be in a better position to face any further contagion effect or any resurgence of the crisis.â€
Monti is heading to a meeting of euro-area finance chiefs before the leadersâ€™ summit as 1 trillion euros ($1.3 trillion) of emergency cash from the European Central Bank helps push the yield on Italyâ€™s 10-year bonds — and their risk premium to German securities — to the lowest in six months.
â€œI donâ€™t think it is likelyâ€ that spreads will widen again, Monti, 68, said in the interview, sitting in an ante-room of the Chigi Palace adorned by two 17th-century globes, a chandelier and gold-colored wallpaper. â€œThe unpredictability of spreads is not negligible. But we see now in the case of Italy a steady, although gradual decline in the last several weeks. I donâ€™t see honestly any reasons why this course should change.â€
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