Italian Measures for the Stabilization of the Banking System

In response to the global financial crisis, the Italian government recently adopted its bank stabilization and liquidity enhancement package, granting extraordinary powers to the Ministry of Economy and Finance. This Memorandum outlines these new powers, including, among others: (i) subscribing for newly issued preferred shares in under-capitalized banks (ii) guaranteeing emergency liquidity assistance loans by the Bank of Italy; (iii) extending a state guarantee to bank depositors; and (iv) entering into certain liquidity enhancement transactions with banks.