News from Italy: Rome to activate ‘ALTERNATIVE CURRENCY’ – could trigger divorce from euro | World | News
Key members of Deputy Prime Minister Matteo Salvini’s Lega party have raised the possibility of a new national currency to help pay off debts. The plans were only highlighted after the European Commission paved the way for an initial fine of up to £ 3 billion on Wednesday. The Brussels-based EU executive warned that the sanctions were “justified” because Italy had reached the threshold for non-compliant action.
A Commission report found that Italy’s populist government had not made enough progress over the past year to reduce its debt.
The Commission said: “Italy’s large public debt is a major vulnerability for the Italian economy and its decisive reduction should remain a priority in Italy’s best interest.
“Italy’s public debt-to-GDP ratio, at 132.2% in 2018, is the second in the Union and one of the largest in the world. “
Influential business figures from the Senate of Rome and the lower house of the Italian Parliament have pushed a so-called parallel currency.
Claudio Borghi, senior economic adviser to the League and critic of Italy’s accession to the euro zone, defended the concept.
Alberto Bagnai, chairman of the Senate finance committee, also expressed his support for the proposal.
Mr Borghi said the plan for the so-called “mini-bot treasury bills” was part of the Lega-Five Star coalition’s “contract”.
He added: “It’s a way to raise badly needed credit and put money into circulation.
This would effectively create a new currency by circulating the short-term notes in the market, which would de facto make them a new pending lira.
The euro would eventually be ousted and frayed as it was replaced by the new currency.
There are no official proposals for the ‘mini-bots’, but they featured as a key commitment in the Lega election manifesto last year and the coalition agreement also pays tribute to them.
A vote in Parliament last week passed a motion calling on the government to consider using “mini-bots” to alleviate debt to suppliers.
Riccardo Puglisi, an economist at the University of Pavia, said the proposal was “a way to facilitate Italy’s exit from the euro zone”.
Marcello Messori, director of the School of European Political Economy at Luiss University, told the Financial Times: “The issue of mini-BOTs is a way of facilitating the creation of dual monetary circulation.
But the move would likely put Italy on the path to a coalition with the EU, as such a deal would run counter to the bloc’s treaties.