Italy’s President Moves to Calm Financial Markets

Posted November 9th, 2011 at 5:25 pm (UTC-5)
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Italian President Giorgio Napolitano has named former European Commissioner Mario Monti a senator for life. Monti is seen as the Italian president's only choice to succeed Silvio Berlusconi as prime minister.

Monti's nomination Wednesday is viewed as a sign to reassure financial markets following Mr. Berlusconi's announcement that he would step down after parliament passes crucial economic reforms aimed at reducing Italy's huge debt. This could happen as early as the end of this month.

In a statement from the presidency, Mr. Napolitano said the nomination was based on Monti's merits in the social and scientific domains.

Italy's borrowing costs topped the 7 percent threshold Wednesday, which was the borrowing rate that forced Greece, Ireland and Portugal to ask for bailout loans. Italy is eurozone's third largest economy and its bailout would be too expensive for the 17-nation common currency bloc to bear.

The prime minister reiterated Wednesday that he will step down as soon as the budget law is passed. Mr. Berlusconi also told Italy's La Stampa newspaper that he sees Italy holding elections in early 2012. He said he will not seek office in the next election.

Mr. Berlusconi made his resignation announcement Tuesday after he lost his parliamentary majority during a vote on a routine budget measure in the lower house, with seven members of his ruling party defecting.