UniCredit, a big Italian bank, saw its shares drop more dramatically, more than 4.5 percent. If yields continue to rise, investors could begin to doubt the government’s solvency. There is danger of a vicious circle if the Italian economy sags. Bad loans are a dead weight on the Italian economy, because they prevent banks from providing credit needed for businesses to expand. And problems at Italian banks would become even more intractable.

Source: New York Times December 05, 2016 07:50 UTC