News Summary: Italy denies derivatives risk

News Summary: Italian Treasury denies state finances at risk from 1990s derivatives contracts

Associated Press

THE NEWS: The Italian Treasury said derivatives contracts it signed years ago pose no threat to state finances, a response to news reports claiming it risks losing 8 billion euros ($10.5 billion).

WHAT'S A DERIVATIVE: A derivative is a financial contract whose value is based on an underlying asset, such as a stock or bond.

THE SOURCE: Questions about potential risks linked to Italian derivatives arose from media reports that said Italy risks losing billions on derivatives contracts it restructured in 2012 at the height of the eurozone crisis. The reports were based on a confidential document by the Treasury to state auditors.

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