Market Extra: Why Italy’s banks could ignite a eurozone crisis

It wouldn’t be summer without Europe threatening to upend global financial markets. The looming threat this year comes from Italy and its long-suffering banking sector.

“As we trend into the second half of the year, the situation in Italy, and its spill over for the rest of Europe, will continue to be one of the biggest macro-political risks we are concerned about,” said Federico Santi, a London-based analyst at Eurasia Group, a risk consulting group, in a note.

The focus on Italy comes after the U.K. voted in late June to exit the European Union. In a worst-case scenario, analysts fear Italy’s bank problems could threaten the country’s membership in the eurozone.

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