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The Russia-Ukraine war is currently going on through its seventh month. Since its start in February this year, the repercussions have been all around the world. Along with the war, the sanctions and counter-sanctions on Russia also made huge impacts. Russia, despite facing any strain due to sanctions, made the situation tough for many other European countries. Italy turned out to be one such affected country.
Due to various reasons including the Russia-Ukraine war, the economic situation of Italy is going through tough times. Recently the country was reported to deal with a heavy energy crisis. This came in wake of Russia choking the energy supplies in the retailization of sanctions. Citing the current situation, citizens of Italy anticipated it to get shadier. Such distrust among people is clearly visible where many investors were reported to short their positions on liabilities inside Rome.
As reported, by August 2022, approx 39.20 billion euros (approx 39 billion USD) worth of Italian bonds was borrowed. The overall amount of borrowed bonds is quite high and is even more than the level during the Great Recession in 2008. The bond borrowing scheme referred to when investors went on to borrow Italian liabilities anticipating that their value would drop prior to the buyback of debt.
Along with the high rate of bond borrowing, Italy is facing high inflation also. In May 2022, it posted inflation of approx 7.3% and since then it’s on a continuous rise. It was 8.5% in June and 8.4% in July 2022.
Amidst such uncertainties, nothing else could be expected from investors than shorting. The heavy amount of short positions indicates skepticism and speculators even showed concerns anticipating Rome could default. If anything like this happens, then the ripple effect would emerge and the shockwaves are likely to spread across European countries.
Apparently, Italy is among the countries with the strongest economies in the world. However, its dependence on Russian gas made it vulnerable to the situations that the country is currently going through.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
