The short history of the eurozone has taught us that resistance is futile. You cannot extricate yourself from its rules, to which all member states have agreed. Unless the Italian government has a clear-headed strategy for a eurozone exit, therefore, it is setting itself up for a monumental failure. The leaders of the far-right League and the Five Star Movement have strong views, but I do not believe they have a strategy. The main instrument of coercion in the eurozone is not its fiscal rules, but the power of the European Central Bank (ECB) to withdraw funding from national banks. This is not a discretionary power, but one that is automatically triggered once a country’s sovereign debt loses investment grade status. If the banks have large holdings of their home countries’ debt, as is the case in Italy, they are setting themselves up for failure if their governments run an unsound fiscal policy. The trigger for the current rise in Italian bond yields was the rule-busting 2019 budge...

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