Italian municipalities using derivatives to stay afloat

New angles

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The use of derivatives by eurozone sovereign governments is under scrutiny at present (see cover story, page 20). But something similar is happening at a local level too. In what has become a microcosm of the eurozone’s stability and growth pact, Italy’s government is devolving financial responsibility to its regions, provinces and municipalities, while imposing its own ‘internal stability pact’ to keep their finances under control.

The result? An explosion in the use of derivatives by Itali