ROME Oct 21 The Italian Treasury plans to
introduce a system of bilateral guarantees for derivative
contracts over domestic government bonds signed with national
and foreign banks to help lenders manage risks and facilitate
its debt sales.
Under the planned system, outlined in a draft law seen by
Reuters, the Treasury and the banks will exchange cash sums on a
short-term basis depending on the mark-to-market of their
respective derivatives positions.
A Treasury official told Reuters the new system would help
Italy issue debt denominated in currencies other than euros.
Such issues require hedging against currency risks through
derivatives contracts and this would be too expensive without
the collateral guarantees, the official said.
The sums held as guarantees will bear interest at