BOT stands for Buoni Ordinari del Tesoro (Ordinary Treasury Bonds).

Mini means the denomination is smaller than the lowest denomination of regular treasury bonds, which is €1,000, thus "Mini-BOT".

The Italian government, led unofficially by deputy prime ministers Matteo Salvini (League) and Luigi Di Maio (Five Star Movement) both support the idea of a parallel currency.

The technocrat prime minister, Giuseppe Cont, is not calling the shots and threatened to resign over this issue.

ECB president, Mario Draghi, proclaimed “Mini-BOTs are either money and then they are illegal, or they are debt and then the stock of debt goes up. I don’t think there is a third possibility.

Possibility Three

A week ago, I noted possibility number three in Italy's Mini-BOT Trojan Horse Could Blow Up the Eurozone.

Possibility three is a Trojan horse designed as a stepping stone to get Italy out of the Eurozone.

Boiling Point

The Telegraph reports Italian Tensions Hit Boiling Point Over Plans for 'Currency' to Rival the Euro.

The two parties that make up the fractious governing alliance – the hard-Right League and the Five Star Movement – want to introduce a new type of government bond that would be used to pay off the state’s debts to companies and individuals.

Both the League and Five Star are deeply eurosceptic and have in the past mooted the idea of abandoning the common currency, with Matteo Salvini, the League’s combative leader, last year calling the euro “a mistaken experiment that has damaged jobs and the Italian economy".

The idea of introducing mini-BOTs has alarmed Europe, with Mario Draghi, the head of the European Central Bank, saying on Thursday that they would either amount to a parallel currency, in which case they would be illegal, or they would simply add to Italy’s towering debt.

He received support a day later from Vincenzo Boccia, the president of Confindustria, Italy’s employers’ federation, who said: “We are on the same wavelength as Draghi about the mini-bots because it would just mean more public debt."

“There’s a complicated game going on between the League, Five Star, the Quirinale (the residence of the president of Italy, Sergio Mattarella), ministers and the prime minister,” said Prof Giovanni Orsina, a professor of politics at Luiss University in Rome.

RECOMMENDED ARTICLES

Showdown Coming Soon

A showdown is certain.

The timing is unknown, but it is sooner rather than later.

At the moment, France is also in breach of economic rules and there is this "little" thing called Brexit on the ECB and EU's mind.

So the EU will do what it always does, pretend there is no crisis and hope it goes away. But it won't.

Meanwhile, Italy wants to do this and will do this, but it would rather the EU trigger the event.

Path Set

Italy's budget is not close to meeting EU rules.The EU has threatened Excessive Deficit Procedures against Italy.

The EU will bush this aside debt targets for as long as it can, but the fate is sealed. The EU will either have to abandon its rules or fine Italy.

The upcoming fine and a spike in Italian bond yields will be the trigger for Italy to escalate the crisis with Mini-BOTs.

The longer the EU waits, the more time Italy has to prepare for the Mini-BOT launch.

I expect this to trigger within a year, and possibly months.

Italy is set to leave the Eurozone. The Mini-BOT is the transition mechanism. Few see it coming.

Mike "Mish" Shedlock

Italy's Mini-BOT Trojan Horse Could Blow Up the Eurozone

Italy threatens to create a parallel currency dubbed the Mini-BOT. If launched, it could lead to a Eurozone breakup.

Italy Openly Defiant of Eurozone Stability Pact, Deliberately and Knowingly

Eurozone officials and the ECB are in a quandary over Italy's deliberate defiance of budget rules.

How Italy Leaves the Eurozone, Step by Step

Earlier today, Italy told the EU where to go with it budget demands. Expect the EU to huff and puff.

Italy Heads for 2nd Lost Decade, Entire Eurozone on Verge of Contraction

Italy's GDP is still below the 2008 level. PMIs from Germany and Italy show the entire eurozone on verge of contraction.

Eurozone Day of Reckoning Coming Soon: Showdown Between Italy and Germany

The eurozone cannot survive without Italy. The serious problem at the moment is the Eurozone also cannot survive with Italy.

Eurozone Growth Slows to 4-Year Low, Italy Stagnates, Global Recession Risk Up

Eurozone growth slows to 0.2%, a four-year low as Italy stagnates. CEBR says risks of a global recession have risen.

In Unprecedented Move, EU Rebukes Italy's Budget: Italy Politely Says Screw You

The budget crisis in Italy broke wide open today with a formal, unprecedented rebuke by the EU which Italy dismissed.

Financial Fragmentation of the Eurozone in Pictures

Eurozone fragmentation is massive. Target2 imbalances are just part of the picture.

Reader From Italy: Forget the Center-Right Coalition Thesis

If you think it's likely Italy's center-right coalition will form again, an Italian reader says think again.