EU trembles: Italy budget boss plows ahead with plans for 'alternative' currency to euro

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Italy and the bloc have been engaged in an ongoing clash since the European Commission warned the Italian Government had breached common rules over growing public debts. But Rome has so far remained defiant of orders to change their proposed budget for the year, with key figures in Matteo Salvini’s Lega party putting forward plans for an alternative currency to circulate alongside the euro in order to ease pressure from the European Union. Claudio Borghi, the head of Italy’s lower house budget committee and a vocal critic of the eurozone, told Bloomberg: “It’s an idea to stay better within the rules.

“If there is commercial credit from state suppliers, that debt is not computed under Maastricht rules until it is paid. It’s an incentive not to pay the suppliers.

“If you have an argument with the European Commission on 0.1 percent of the debt – because this is what we are talking about, not three percent of the GDP, shifting from the projected situation – until you pay the suppliers then it’s not computed as a debt, then you have a problem.

“We have a lot of people who are expecting money from the state that do have a credit and need to be paid. If you print a mini-BOT, it’s not a straightforward debt, it’s a tax credit.”

The proposal would effectively create a new currency by circulating the short-term notes on the market, making them a de facto new lira in waiting.

READ MORE: EU divided: Furious Italy sends Brussels dire ultimatum – ‘This is not right!’

Mr Borghi insisted such a proposal would also allow local businesses to receive a push since Italy only just recovered from a stint of recession.

He continued: “Once you have the paper form, then you are able to move quickly because you spend it as quickly as you spend a banknote.

“You have a push in local shops.”

There are no currently no official proposals for the “mini-BOTs” but they featured as a key pledge in Lega’s election manifesto last year and the coalition agreement also pays homage to them. A vote in the Italian Parliament earlier this month passed a motion calling on the government to consider using “mini-BOTs” to ease its debts to suppliers.

Deputy Prime Minister Matteo Salvini last week insisted Rome will continue to support plans to issue the proposed alternative currency unless a better solution was put forward to ease the pressure.

Mr Salvini insisted the mini-BOT would be “a tool to pay state debts towards families and suppliers. If there is a smarter way of doing this someone should say so, otherwise we’ll stick to it

European Central Bank president Mario Draghi told reporters earlier this month: “They are either money — and then they’re illegal — or they’re debt, and then that stock goes up.”

Other leaders have admitted that this currency introduction would threaten to bring the entire eurozone down

Italian President Giuseppe Conte attended a summit of EU leaders last week in which he put forward demands to reform budget rules across the bloc as he negotiated to keep Italy from having to pay a hefty fine for infringement.

Speaking following the meeting, Mr Conte however said he did not think there could be progress in eurozone reforms unless Italy’s interests were properly taken into account.

Leaders have set a December deadline to make progress on the eurozone reform.

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