Italy's proposed 40% windfall tax on banks' profits has caused controversy, leading to a 3% drop in Europe's main Bank stock index and criticism from analysts and policymakers. The government has since toned down the plans, but Italy's former deputy minister of economic development warns that the law could deter international investors. However, the ruling coalition government believes that the tax is fair and argues that lenders have not passed higher rates onto savers. Italy's foreign minister and leader of the Forza Italia party suggests that the text of the law should be rewritten in collaboration with banks.

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