Italian finance officials held emergency talks on Monday as the country’s borrowing costs soared to record levels and the stock market nose-dived.
The markets remained increasingly worried about the level of public debt in the euro zone’s third-largest economy.
The so-called Financial Stability Committee maintained that the Italian banking system was sound, despite worries that the country’s public debt had reached 120% of gross domestic product.
The Milan stock market has fallen around 13 percent over the past month and closed down another 2.5 percent on Tuesday.
Italy also suffers from chronically weak growth. Commentators doubt the government can push through the tough reforms needed to increase productivity in the economy.
Many analysts now view Italy’s debt problems in a similar way as struggling economies Greece, Portugal or Spain.
After the bailout of Greece, some economists worry that if it came to it, the EU could not afford to save Spain and Italy too.