Italy Treasury official names key condition to approve ESM reform

The key condition for Italy to approve a eurozone reform of its bailout fund is that banks' holdings of sovereign debt are not weighted according to the credit rating of the sovereign, a junior economy minister said on Monday. Italian parties are divided over whether Italy should try to block the reform of the fund, known as the European Stability Mechanism (ESM).

Economy Ministry undersecretary Maria Cecilia Guerra said Italy would only approve the ESM reform if it had guarantees over other proposals for eurozone reform currently on the table. "In particular, what we don't want (is that) public debts are risk-weighted according to the credit rating of the countries, which would be very damaging for us," Guerra said on the margins of a conference in Milan.