Steve Keen — Brussels-Rome war: EU holds back Italy’s anti-euro tide for now

The first battle in the war between Brussels and Rome has thus been won by Brussels: I have little doubt that Mattarella was lobbied very strongly by EU figures to block Savona, because he is capable of developing the real weapon that Five Star/Northern League could bring to bear against the euro – the “mini-BOT.” Named in reference to Italy’s “buoni ordinario del tesoro,” which are short-term government bonds, these would be government-issued notes valued at between €1 and €500, which would be issued to people and companies owed tax refunds by the government. These, in turn, would be valid for paying taxes, buying train tickets, getting petrol at government-owned fuel stations, and so on.

These sidestep the euro’s monopoly as legal tender in the eurozone because a vendor does not have to accept these if they are tendered in an exchange. But they can be accepted, perhaps at a discount to face value, and thereby become an alternative means of payment to the euro.

This is a weapon that Greece prepared, but never used, because Yanis Varoufakis, in what he describes in Adults in the Room as “Mea Maxima Culpa” (“my most grievous fault”) decided to leave the decision to Alexis Tsipras. Tsipras demurred, and the result was a Greek tragedy.

An alternative-means-of-payment is a much more cogent weapon in Italy’s hands than it would have been in Greece’s. Italy’s economy is six times larger than Greece’s and average salaries are almost double (though per-capita income has fallen substantially since the global financial crisis); its economy, particularly in the north, is an industrial powerhouse; and its climate supports a huge range of agricultural products. Much more of what Italians need to buy can be purchased from other Italians than was ever feasible for Greece (the only categorical exception is oil). The mini-BOT could really free Italy from the stranglehold of the euro.…