The Italian economy has been operating at a one percent average growth rate, and is one of the top most troubled markets in the European Union. Relative to other western societies, Italy has a small and somewhat underdeveloped economy. It is made up of many small to medium sized family owned businesses that manufacture and export to other nations. However, much like Greece, Italy has charged its economic growth with borrowing and more borrowing. Currently their debt:GDP is 120 percent, meaning their liabilities dramatically outweighs their assets. In the recent financial contagion Italy has been among the most fiscally troubled European markets, and has struggled immensely in its recovery. The European Central Bank (ECB) can only assist in purchasing troubled debt for so long. Typically when a country is struggling financially, investors in bond and stock markets will sell off their holdings, therefore decreasing stock prices and increasing bond prices (a fall in interest rates on a bond creates an increase in bond prices). However, note that as of now this kind of disturbance has not occurred within the bond market as the ECB has been substituting absent demand for these securities. This should provide the reader with a hyper condensed backdrop of the Italian financial crisis as of 2012

Currently, Italy has been granted a 150 BN euro bank bailout in order to prevent a potential run on their banks from occurring. A statement from the Wall Street Journal today that the "European Commission has authorized Italy to use government guarantees to create a precautionary liquidity support program for their banks" citing a spokeswoman from the EU executive arm. Throughout the year of 2016 Italian banks have lost over half of their market capitalization as a result of bearish (conservative) investor decisions. In short, the Italian banking sector is a huge mess, where regulators are attempting to inject a safe amount of liquidity in order to prevent a bank run, at the risk of inciting a mass withdrawal of equity from global investors. This occurrence would be a result of market signaling on the part of the regulators (a signal of poor financial health often leads to mass asset sell offs on financial exchanges).