ECB's Noyer: Italy not weak, euro breakup out of
By Stanley White and Rie Ishiguro
TOKYO (Reuters) - Italy's economy is fundamentally sound and should be able to win back market confidence if it shows fiscal discipline, European Central Bank member Christian Noyer said on Monday, ruling out a collapse of the euro zone because of the sovereign debt crisis.
Noyer, also Bank of France governor, said he could not comment on reports that Italy was talking to the International Monetary Fund about possible support if investors continue to push up its borrowing costs.
The euro, under selling pressure for weeks, rose on Monday on reports that debt-strapped Italy could turn to the IMF as a lack of consensus hampers Europe's response to its debt problems which threaten to undermine the global economy.
"Italy should not be considered a weak economy," Noyer told reporters in Tokyo.
"A breakup of the euro zone is out of the question. There is no plan B."
Though Italy's debt levels are relatively high, it runs a primary budget surplus and has a strong industrial base, Noyer said. A primary budget balance excludes debt servicing costs and income from bond sales.
One source with knowledge of the matter said contacts between the IMF and Italy had intensified in recent days as concern grows that German opposition to an expanded role for the ECB could leave Italy without a financial backstop.
The source said it was unclear what form of support the IMF might offer, such as a traditional standby arrangement or a precautionary credit line, if a market selloff on Monday forced immediate action. Continued...