Bank of Italy governor Ignazio Visco expects 2013 to be a 'negative' year for the Italian economy but anticipates that 'the recovery will take hold during the course of the year'.

With regard to last week's IMF report of a capital flight from Italian banks, Visco stated that the exit of deposits were being done by foreigners.

He said that there were no signs that local businesses or households were withdrawing their money, according to an interview with Nikkei on the sidelines of the IMF annual meetings in Tokyo,

The Italian monetary authority was also quick to point out that his country's banks were unlike Spanish financial institutions.

He explained that Spain is confronting foreclosures due to its housing bubble. "Their problem has to do with intrinsic asset quality," he explained. On the other hand, the Italian loans that are not being paid back are simply a "consequence of the downturn in the real economy".

JM

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