by Eric J. Lyman
ROME, June 22 (Xinhua) -- A controversial plan to reduce Italian government debt through the issuance of small-denomination promissory notes is stoking fears that the notes could amount to a new currency that would destabilize the Italian economy and the euro currency zone.
Despite widespread criticism from across Europe, the idea is one of a small number of policy proposals to have the support of both Matteo Salvini and Luigi Di Maio, the leaders of the nationalist, right-wing League and the populist Five-Star Movement, respectively. The two parties, which are in a coalition government supporting Prime Minister Giuseppe Conte, often disagree on policy priorities.
Both Salvini and Di Maio brush aside worries that Italy has plans to distance itself from the euro zone or the European Union in general, though Salvini has repeatedly criticized the euro as "a bad experiment" responsible for many of Italy's current-day economic problems.
The proposal to issue mini-BOTs was approved by the lower house in the Italian Parliament in May, though the vote was non-binding.
The promissory notes are colloquially referred to as "mini-BOTs." The name comes from the Italian-language acronym for "Ordinary Treasury Bonds," with the word "mini" added because they would be issued in denominations smaller than the lowest value of standard bonds, which is 1,000 euros (1,130 U.S. dollars).
But unlike standard bonds, which are paid for in euros and used as investment vehicles, the government would use them in lieu of money for some kinds of payments to companies and individuals. In addition, the mini-BOTs would not expire, unlike standard bonds.
Those receiving the promissory notes could spend them to pay taxes or other payments to the government, and it is possible some businesses would begin to accept payments in the form of the promissory notes. Unlike the euro, the mini-BOTs would not be subject to the supervision of the European Central Bank.
Despite the support of Salvini and Di Maio and the endorsement by the Italian Parliament's lower house, the plan has drawn fire from other sources, including Conte, who threatened to step down if the government starts issuing the notes. Similarly, Finance Minister Giovanni Tria said there was no need for the mini-BOTs. Conte and Tria are both political independents, neither members of the League or the Five-Star Movement.
Di Maio blasted members of the government who criticized the proposal, saying the officials who have complained are usually silent until "someone proposes something innovative and then they wake up and say, 'No, no, it cannot be done.'"
Outside the government, figures criticizing the move include Mario Draghi, the Italian economist who heads the European Central Bank, who said they "are either a kind of currency, which is illegal, or they are debt" which would increase the country's national debt, Draghi said.
Draghi's remarks were echoed by Vincenzo Boccia, the head of industrial federation Confindustria: "We take the same line as Draghi about the mini-BOTS, which would just create for public debt."
Among non-Italians, Christine Lagarde, who heads the International Monetary Fund, said, "there are many better ways to deal with the payment of government debt."
According to ABS Securities analyst Oliviero Fiorini, the proposal comes from a belief in some corners of Italy that the 2002 introduction of the euro currency dealt a blow to the Italian economy that it never completely recovered from.
"Many economists believe Italy should not have joined the euro zone because that meant it had to give up control of the money supply and could not devalue its currency," Fiorini told Xinhua. "Some of those economists want to go back to the pre-euro days, and a few of them have the ear of people in the government."
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