Italy's Central Bank Governor Ignazio Visco has told CNBC that there is no question about the stability of Monte dei Paschi bank after it suffered a nearly $1 billion loss on derivatives trades.
Shares of the bank have tumbled more than 20 percent this week after it revealed it could face losses of up to 720 million euros ($956 million) on past trades.
"As far as the stability of the bank,there is no question that the bank is stable," Visco told CNBC at the World Economic Forum in Davos, Switzerland.
(Read More: Monte Paschi Shares Plunge on Derivative Loss Fears)
Visco said an investigation of the bank was under way by a judge.
Shares in the bank rose over 10 percent in Friday's trading session recovering from Thursday's sell-off. The bank's shareholders met on Friday and approved two capital increases of up to 6.5 billion euros, which is a condition of the 3.9 billion euro state aid that the bank requested last year.