Italy's Lo Spread: A Growing Concern
By Tim Hedges, Panicale, Umbria, Italy
On the nightly news ticker, it's a common sight to see what Italians call "Lo Spread," or the difference between the borrowing costs of Italy and Germany's 10-year bonds.
Keeping a lid on "lo spread" must be Rome's priority. If it widens too much, it could raise Italy's borrowing costs and make it harder for the country to pay its debts. This could lead to a financial crisis, which would have a devastating impact on Italy and the rest of the eurozone.
So what is "lo spread," and why is it so important? It's the difference between the interest rates that Italy and Germany pay on their 10-year bonds. The higher the spread, the more investors demand to lend money to Italy. This is because they perceive Italy as being a riskier investment than Germany.
There are a number of factors that can affect the spread, including Italy's political and economic stability, its public debt, and the overall health of the eurozone economy.
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