The Italian crisis within the Eurozone is potentially on the cusp of entering a new level as the Italian Lower House in the Government have voted to study a concept called Mini-BOT’s. Whilst this is an early stage concept it comes with a severe warning down the line. A mini-Bot is short for mini Bills of Treasury, essentially it is similar to IOU that will allow the Italian Government to pay of their debts down the line to commercial businesses.
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However, the major concern of the concept is that it could become a parallel currency to the euro, which is illegal in EU laws. The Mini-Bots would be issued to service the Italian debts providing them with cash they don’t currently have and essentially stimulating the economy.
The Government have been accused of underhand tactics bringing this vote with the Lower House unaware of exactly what they were voting on. In short, some analysts see this as the first stage of Italy trying to leave the euro which was floated in last year’s elections with the reintroduction of the Lira.
The Italian Government could introduce the Mini-BOT’s meaning a currency was in place then suggest they’re looking to leave the Eurozone, arguably this method would mitigate a run on the banks and stock markets as alternative currency would be in place. One thing that is for sure is that any attempt by the Italian Government to break ties from the EU comes with extreme caution and intense scrutiny.
As the Eurozone economically continues to dwindle, the European Commission has called for further integration amongst member states, calling for a euro wide budget and a collective Deposit Guarantee Scheme. EU Finance Ministers who have been meeting this week have warned that if there is not more done as a collective then the Eurozone risks breaking up.
As cracks start appearing in the Eurozone there is further reliance on the different member states to integrate closer. However, when something isn’t working the best course of action is rarely to keep on the same path, long term for the euro there could be significant uncertainty on the cards.
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