Bonds News

Italy Econ Min slams centre-right plan to issue "parallel currency"

ROME, Feb 22 (Reuters) - A proposal by a centre-right coalition, leading polls ahead of Italy’s election, to issue small denomination sovereign bonds, amounts to a parallel currency and would damage the public accounts, Economy Minister Pier Carlo Padoan said on Thursday.

The “mini-BOT” initiative is championed by the eurosceptic League and backed by its ally, former prime minister Silvio Berlusconi’s Forza Italia, whose alliance was leading in the final polls ahead of the March 4 vote.

Interviewed on RAI state television, Padoan, who has served in a government run by the centre-left Democratic Party (PD), described the scheme as “a plan to circulate a disguised parallel currency”.

“Historical experience shows that, in these cases, a country that adopts a double currency drastically damages its public finances, growth potential and stability,” Padoan added.

Under the League’s proposal, the “mini-BOTs” - named after Italy’s short-term government bonds, would be issued by the Treasury and initially enter circulation as payment to firms and individuals owed money by the state.

Reporting by Isla Binnie