Italy is debating whether to create a new domestic currency to help pay its debts and ultimately allow them to leave the Euro. Prominent members of deputy prime minister Matteo Salvini ruling league party are behind the idea and last week it gained a vote in Italian Parliament.
Italy’s debt crisis has been mounting for some time as their economy dives further into a recession and national debt spirals out of control. Back in February Salvini announced that the nation’s Gold was the property of the people, effectively protecting their substantial Gold reserves from EU debt collectors. Now it seems Italy want to protect themselves further and are tinkering with the idea of creating a new national currency which they control to allow them to detach themselves from the Euro.
Mr Salvini suggests that the Italian Government should issue debt in small denominations that can change hands as a medium of exchange. The new proposal involves creating a Treasury Bill which would allow the Government to pay the arrears it owes to commercial businesses and citizens to pay their taxes.
All of this would of course be in total breach of EU treaties as effectively they would be running a parallel currency alongside their official currency, the Euro.
The Bank of Italy has said though that because it would not be ‘legal tender’ it would not violate any agreements with the EU. Though they didn’t dismiss the idea that in the future it could become legal tender.
“No one wants it to be made legal tender now. There is no uncertainty about that. Still, once in circulation it could become legal tender in the future”
The EU Commission are now recommending disciplinary action against Italy:
Italy is on the brink of collapse, this fact is certain and the EU are unlikely to be forgiving on the issue. So far the alternative currency proposal is just that, a proposal – but we’ll be following how this develops closely and let you know.
We do have one suggestion though, Bitcoin.