But if the Italian Central Bank is shunned as a counterparty by the rest of the Eurozone central banks, foreign banks not regulated by the bank of italy may withhold any reserves they hold with the Italian Central Bank. Moreover, they may refuse to extend credit to Italian banks on the argument that their Lender of Last Resort is not creditworthy.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010