Senior European Union officials believe Italy risks facing a massive debt restructuring task - and one that would hit its own citizens hardest - unless it backs down in its unprecedented challenge to Brussels' budget rules. Italy's 2.3 trillion euro national debt dwarfs that of Greece and the euro zone bailout fund would not be able to cope with the costs of supporting its government in a crisis, the International New York Times reported on a Reuters story. Any such crisis could threaten the euro itself, seen by many as the EU's greatest achievement.

Just as Iceland looks back at a decade of recovery since its financial and economic collapse, the north Atlantic island is once again grappling with an existential challenge for one of its key industries, Bloomberg News reported. Tourism and the foreign cash it provides was instrumental in digging the 340,000-person nation out of its deep hole. Now, the industry is cooling fast and problems are mounting for its airlines after years of rapid expansion. Rewind to 10 years ago, and a similar tale could be told about the nation’s banks.

Some of Greece’s biggest banks suffered steep share price falls on Wednesday as investors worried they may not have enough capital to meet fresh targets on reducing their large portfolios of bad debts, the Financial Times reported. Shares in Piraeus Bank, the country’s largest lender by assets, dropped more than 20 per cent, cutting its market capitalisation to less than €600m. The bank responded by trying to reassure investors that its plan to boost capital by issuing €500m of subordinated bonds was still on track.

Shares in peer-to-peer lender Funding Circle traded as much as 24 per cent below their initial public offering price on their first day of trading, in a blow to aspirational fintech companies hoping to float, the Financial Times reported. At their low of the day, the company’s shares hit 334.5p, down from the IPO price of 440p. During conditional dealings on Tuesday, ahead of their official London Stock Exchange debut, the shares had been trading at a steep discount to the offer price, closing down 17 per cent at 364p, according to data from Refinitiv.

The global financial crisis left lasting scars on the world economy, including slower growth, higher government debt and even lower fertility rates, the International Monetary Fund said. A decade after Lehman Brothers filed for bankruptcy in 2008, output in more than 60 percent of the world’s economies remains below where it would have been if the crisis hadn’t occurred, the fund said in a report Wednesday. The drop was steepest in the 24 countries that experienced financial crises, the Fund said in an analytical chapter accompanying its latest World Economic Outlook, Bloomberg News reported.

The 19-country eurozone economy lost momentum in September despite a resilient performance by the services sector in Italy, according to a closely watched survey released Wednesday, the International New York Times reported on an Associated Press story. Financial information firm IHS Markit said its composite purchasing managers' index, a key measure of business activity in services and manufacturing, slipped to 54.1 points in September from 54.5 the previous month.

The recent clash between Italy’s populist government and the European Union over its ballooning budget deficit has created an attractive buying opportunity for shorter duration Italian sovereign debt, according to UBS Group AG, Bloomberg News reported. The bank initiated an overweight position in two-year government bonds versus cash as there is “only a very low probability that Italy will default within the next two years,” according to a note from Mark Haefele, chief investment officer at UBS Global Wealth Management.

Credit Suisse, one of the largest players in the $1.3tn market for leveraged loans, has issued an unusual defence of lending to highly-indebted companies even as investor concerns rise over the booming area of finance, the Financial Times reported. After investors expressed worries over sliding standards and the IMF singled the type of loan out as a potential source of financial instability, the Swiss investment bank’s asset management arm sent a confidential letter to clients in September attempting to assuage fears.

There is "no chance" of Italy defaulting on its debts and the country is very different from Greece, Italy's minister for European affairs was quoted on Wednesday as telling EU lawmakers. Paolo Savona was speaking after presenting a document to Italian lawmakers in the European Parliament in which he proposes a review of the EU's monetary and fiscal policy, the International New York Times reported on a Reuters story. "I think there is no chance that Italy will default on its public debt," Savona said, according to a person who attended the meeting.

The Moldovan government says loss-making national airline Air Moldova has been sold to a Romanian group for 1.2 billion Moldovan lei ($71 million). The Public Property Agency said Tuesday that Civil Aviation Group paid 50 million lei ($2.96 million) to Moldova's state budget, the International New York Times reported on an Associated Press story. The remaining money from the purchase will go toward covering debts that were sold to prevent the airline's bankruptcy. Air Moldova was founded in 1983 and has flights to 33 destinations.