STORY: Italy's Prime Minister said she took "full responsibility" for the shock decision to impose a one-off bank tax.

Last week, Italy set the surprise 40% tax on profits gained from higher interest rates.

The announcement has been blamed for hurting the government's credibility with financial markets.

But Prime Minister Giorgia Meloni was defiant on Monday (August 14) and said she would do it again.

Meloni told three leading Italian newspapers the levy was not intended to punish lenders.

Italy's conservative government unveiled the unexpected decision late last Monday (August 7) to shore up its political base.

But it partly backtracked by clarifying there was a cap on proceeds 24 hours later, and it also came after having changed the threshold to apply the tax in the meantime.

It targets a rise in profits banks have derived from higher rates.

Rome's communication over the issue has also caused alarm among international investors.

Sources told Reuters the Treasury expected to draw less than $3.3 billion from the tax.

But before there was clarification on the cap, calculations suggested much higher sums.