US Treasury official advises Italy to stay in eurozone

US Treasury official advises Italy to stay in eurozone
Italy's presidential palace is pictured on Monday. Photo: Alberto Pizzoli/AFP
Crisis-stricken Italy should work to resolve its current political crisis while staying within the eurozone, a senior US Treasury official said on Tuesday.

US Treasury Secretary Steven Mnuchin is due to meet later this week with his counterparts at a Group of Seven ministerial meeting in British Columbia, Canada, an event sure to be dominated by the Italian crisis and Washington's multi-front trade disputes with major economies.

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A power struggle between Italy's presidency and populist parties on Tuesday shook global markets and called the country's continued membership in the European single currency into question.

“I think it would be better if they were to work things out within the eurozone without making significant changes there and certainly the Italians have to opportunity to do that,” a senior US Treasury official told reporters in a briefing before the ministerial meeting.

The official, who spoke on condition of anonymity under Treasury Department ground rules, said the department was monitoring developments closely but saw no immediate danger to the stability of the wider financial system.

“At this point, no, I don't see any systemic impact,” he said.