After the resignation of former Silvio Berlusconi, former EU commissioner Mario Monti is set to become the new Italian Prime Minister.
Monti is tasked with the work of forming a new government to lead Italy out of its debt crisis, the latest in the debt woes to come out of the eurozone.
European markets opened up on Monday, with analysts calling it a sign that the “dignity and hope” that Monti has promised Italy is affecting the markets as well.
Italian five year government bonds were also auctioned at a record 6.29% rate, falling from 7.8% at the peak of the turmoil last week. Analysts predicted that the interest rates at which the bonds sold would reflect the market’s confidence in Monti’s ability to lead.
Former Italian Prime Minister Silvio Berlusconi was forced to resign after the yield on Italian bonds rose over 7%, as Greece, Portugal, and Ireland all were forced to seek bailout help from the EU after reaching this benchmark number.
Optimism about Italy has also spread globally, as Asian financial markets also closed up. Hong Kong’s Hang Seng index rose 2% while Japan’s Nikkei closed up 1.1%. Additionally, the euro saw a significant rise against the dollar on the Asian markets.
Building the government
Mario Monti, a highly regarded economics professor as well as ex-EU commissioner, has decided not to set a rigid timetable for the formation of his new government. He has also kept a tight lid on who he plans to nominate as ministers.
The new technocratic government could be in place within several days, however, as consultations are to start on Monday.
17 meetings with senior Italian politicians were held before President Giorgio Napolitano, whose position is largely ceremonial, announced Monti as the new Prime Minister. It is said that most parties approved of this nomination, including Silvio Berlusconi’s.
Speaking to reporters shortly after his appointment, Monti said that he would construct a government aimed at “resuming the path of growth, while remaining attentive to social equity.”
He also promised to work with parliament to “quickly” get Italy out of their debt situation, as he believes only a united effort can keep the country out of a severe bailout situation.
Italian President Napolitano said that Monti’s appointment reflected Italy’s need for a leader who could unite the “diverse political forces” in the country.