A deepening sell-off of Italian bonds and banks has revived concerns over the “doom loop” between weak lenders and fragile government finances.

Italian banks have large portfolios of the country’s bonds and the recent fall in their value will have eroded the sector’s capital cushion, which is needed to protect it from future financial shocks. During the sovereign debt crisis earlier this decade, a selloff in government bonds raised concerns about the banks that held them which, in turn, added to worries about the country’s economic strength.