The European Central Bank (ECB) is critical of the Italian government’s plans to introduce a tax on excess bank profits generated on the basis of higher interest rates. The move sent shares of Italian banks tumbling.
In early August, the Italian government gave the go-ahead to a 40 percent tax on excess bank profits generated by higher interest rates. With the collected funds, he wants to relieve the population, which has found itself under the pressure of high inflation and interest rates.
In Rome, they intend to use the income from the tax to support the population, for example in the area of mortgage loans. The measure is supposed to apply only this year.
The move spooked investors and sent Italian bank shares tumbling, but the government has since softened the measure so that the new tax will be limited to 0.1 percent of bank assets.
“The imposition of an extraordinary tax on the banking sector could make it more difficult for financial institutions to generate additional capital buffers as their profits will be reduced, making them less resilient to economic shocks,” wrote the ECB in a legal opinion summarized by the French news agency AFP.
The ECB also warned that the announced tax will mainly affect smaller banks, whose revenues are heavily dependent on lending.
The Frankfurt-based bank was also critical of the sudden announcement of this emergency measure, which created uncertainty in the market and spooked investors.
The ECB recommended that the Italian government carry out a thorough analysis of the possible negative consequences of the tax on the excess profits of banks.
Source: Rtvslo
