Will Italy be able cut its debt and abide by the new EU fiscal rules? This column presents a simulation of the evolution of the Italian debt-to-GDP ratio. It finds that Italy’s borrowing and saving plans are sustainable – even at today’s high interest rates. As the sovereign debt crisis continues to sweep through the Eurozone, Italy’s public debt is once again at the core of the European economic and political debate. In order to add to such debate, we conduct a simple simulation exercise so as to predict the evolution of the Italian debt-to-GDP ratio. These simulations extend those in the BIS Quarterly Review (2011) ... (full story)