In it, they clarify that the instrument would have no value as legal tender, being in violation of Art.
The Central Bank of Italy published a note (in Italian) on fiscal currencies. The mini-BOT would not break any EU or Italian law if they were just a security, but would be inconsistent with the existing European legal framework if they would become a parallel currency. Inevitably, given what the League and its representatives have said and written, mini-BOT would be seen as a first step in the exit of Italy from the euro, reinforcing denomination risk attached to Italian securities and thus increasing their yield, even if eventually Ital-exit and its huge negative effects were avoided. More important than their specific characteristics would be the message that mini-BOT would send about Ital-exit. If mini-BOT would allow an increase of the budget deficit, they should be evaluated as fiscal expansions, not just as a technical change in the funding of a given deficit. Overall it appears to be a blend of an inferior security and inferior money. They write that the economic evaluation of mini-BOT very much depends on its specific characteristics. As long as the government could keep the credibility of the new currency, prices in euro or in a new currency would have no reason to differ.įrancesco Papadia and Alexander Roth have a good summary of the features of mini-BOT. In the long run, the parallel currency could transform the euro into a “common clearing currency” while the “geuro” would be used for payment between private agents.
They argue that in the short and medium term, the “geuro” would foster demand, growth, and employment. It also provides a tool to avoid the breakup of the Eurosystem and its potentially disruptive consequences.Īmato, Fantacci, Papadimitriou and Zezza proposed in 2016 introducing a parallel electronic currency called “geuro”. Bossone and Cattaneo argue that the Tax Credit Certificate system is projected to accelerate Italy’s recovery and will likely be sustainable.
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Much as helicopter money is evocatively distributed across the economy for free, TCCs as helicopter bonds would be assigned free of charge by the government to households and enterprises. In the Italian context, Bossone and Cattaneo proposed in 2016 the “Tax Credit Certificate” (TCC), which they equated to a “helicopter tax credit”.
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