ITALY has revived talk of an “alternative currency” after European Union chiefs put the country on notice over its “snowballing” debt pile.
Key members of deputy prime minister Matteo Salvini’s Lega party have floated the possibility of a new domestic currency to help pay its debts. The plans have only been emphasised after the European Commission paved the way for an initial fine of up to £3billion on Wednesday. The EU’s Brussels-based executive warned the punishments were “warranted” because Italy had met the threshold for dislplincary action.
A Commission report found that Italy’s populist government had failed to make sufficient progress in the past year to reduce its debt.
The Commission said: “Italy’s large public debt is a major vulnerability for the Italian economy and decisively reducing it should remain a priority in the best interest of Italy.
“Italy’s public debt-to-GDP ratio, at 132.2 percent in 2018, is the second-largest in the union and one of the largest in the world.”
Influential economic figures in Rome’s Senate and the lower house of Italy’s parliament have pushed a so-called parallel currency.
Claudio Borghi, a senior economic advisor for League and a critic of Italy’s Eurozone membership, has championed the concept.
Matteo Salvini’s League to push ‘alternative currency’ as EU crackdown on Italian debt (Image: GETTY)
Alberto Bagnai, president of the finance committee in the Senate, has also shown support for the proposal.
Mr Borghi has said the plan for so-called “mini-bot treasury notes” are written into the Lega-Five Star Movement’s coalition “contract”.
He added: “It is a way to mobilise credit that is badly needed and put money into circulation.”
This would effectively create a new currency by circulating the short-term notes on the market market, making them a de facto new lira in waiting.
The euro would eventually be squeezed out and unravel as its replaced by the new currency.