ECB to raise objections to Italy’s windfall tax on banks

The European Central Bank (ECB) is preparing to send a letter to Italy raising objections about the government’s windfall tax on banks’ profits, the Corriere della Sera daily wrote on Friday.

The letter will criticize the fact Rome announced the tax last week without previously informing either the Bank of Italy or the ECB as it is supposed to do under EU rules, the newspaper wrote, without citing sources.

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A spokesman for the ECB told Reuters on Friday its President Christine Lagarde has received an official request for consultation over the measure from Italy’s economy minister Giancarlo Giorgetti and the ECB will publish its opinion “in due course.”

According to the Corriere della Sera article, the ECB believes the tax risks weakening Italy’s banks and its economy in general, concerns it will raise in the letter to be sent within “a couple of weeks” at the latest.

Recent opinions issued by the ECB regarding similar taxes on banks in Lithuania and Spain warned that they could erode lenders’ resilience to economic shocks and reduce their ability to provide credit.