What the Eurozone does for Italy

The European Central Bank promised it would keep Rome’s borrowing costs from spiraling out of control, and it seems the bankers meant it. Data released last week highlights the subsidy the ECB is already offering to Italian borrowing, while underscoring the political dangers ahead for the central bank and the president Christine Lagarde.

The ECB has been preoccupied in recent years with managing the divergence in borrowing costs between financially sound and profligate eurozone members, a gap most often measured by the spread between Italian and German bond yields. Ms Lagarde discovered this was part of her job as head of the ECB early on, when the markets punished her in March 2020 for saying she was not in the business of managing spreads.