Italy reports finances not at risk following media reports of derivatives losses

The Italian government on Wednesday denied alleged wrongdoing over its derivatives contracts and said that the country's finances are not at risk. The reaction came following reports of the Financial Times saying that Italy was facing losses of as much as 8 billion euros (10 billion U.S. dollars) on controversial derivative contracts taken out in the late 1990s and restructured at the height of the eurozone crisis. "The hypothesis that the Italian Republic used derivatives at the end of the 1990s to meet the conditions required to enter the euro is absolutely baseless," said a statement from the Italian economy ministry. All derivatives contracts carried out at that time were "correctly registered" and confirmed to be in conformity with the national and European accounting rules as proved by Eurostat's systematic checks, the statement said. "The philosophy underlying derivatives transactions is based on criteria inspired by the pursuit of the State's interests" aiming to protect them against serious market risks including "foreign exchange risk and interest rate risk," it said. "However, like any insurance, if the event from which you protect yourself does not occur, you carry a cost, although it remains justified by the priority given to the prevention of serious consequences in case of adverse scenarios," the statement added.