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”.
Il minibot da 100 euro fronte/retro come l’abbiamo immaginato qui, su twitter, alla luce del sole. Con una votazione che ha visto Enrico Mattei e la sua Urbino prevalere su Camillo e Adriano Olivetti, Pietro Ferrero e Giovanni Agnelli. pic.twitter.com/iO19W0LkRN
— Claudio Borghi A. (@borghi_claudio) June 9, 2019
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.
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
You basically have “second world” countries Italy. Greece, Spain, Portugal…that have climbed on board for First world welfare benefits, work weeks, etc. NOTHING in their economies would suggest they could afford this on their own. It’s unsustainable.
Italians have been debasing the currency since the year one AD. After WWII Italy debased the lira roughly ten percent every year for twenty years with a “surprise” reset. As recently as 1960 European tourists entering Italy could change money to Lira on their first stop. Come to stop for lunch in another town and the money was no good in that town. Many Italian towns had their own currency because it was more sound than the Roman Lira. Italians know everything there is to know about renigging debt and debasing currency. Most humorous is German banks holding Italian debt.
What do you call a German bank holding $50 Billion of loans to Italy, France, Spain, and Greece? Answer: Deutsche.
I think DB problems step from New York rather than Italy.
I’ll bet 250,000 lire (once $35) this goes nowhere.
The Mini-BOTs cannot be any worse than the central banking fiat. Bring it on!
Maximus: It is not an opinion. What would you say to an italian, that the money he or she will earn will worht less? his/her savings would worth less? Or are Anti-EU trolls writings to this forum trying to break the integrity? Suspicious site!
As a reasonable people, an EUropean wants valuable currency, secure, safe savings.
Before you accuse me of trolling, look around for a safe and sound currency you talk about. Because I can’t find one. There was a small window when term deposits offered some miniscule safe returns, now it’s gone. Asset inflation is through the roof, e.g. housing where I live. Meantime, the central banking clowns drone about low inflation. Just listening to this daily drip make me boil. So who is trolling?
I live in the eu, i have a good job. I love the safety, and security. Most italians profit from the EU. A lot of people also live fine in the Italy. Look at the North, Milano…etc..
Do you think that instead of reforms and keeping the euro, it is better to make even the currently rich Italians poor ?
I have a good, secure job, too. But just what do you think the financial mirage we live in? Can you also safely retire without worrying about it blowing up any time in the future? Everybody is swimming naked now, whether you know it or not!
And a final thing:
Even if i doubt that Italy could leave the eurozone in short-term, i would thinkt that even for Salvini’s comments, a reasonable Italian saver would have to move out his savings from Italy. why it doesn’t happen? Why the italian’s are not aware ? Or why the market doesn’t punish for Salvini’s comments for the mini-bot?
No difference between an Italian saver and a Zimbabwe saver. Both are equally aware.
berreg,
often when someone does something that appears brave, they do it not due to bravery, but a greater fear of something else.
The fear of something else should focus your mind and perhaps make you reconsider your point of view here. Italy is clearly bankrupt, the state cannot pay what it owes. It cannot print money to devalue the debt. If it officially ‘defaults’, the banks in Italy will collapse and all those savers you are worried about will lose their money. The economy will collapse, civil disobedience, societal collapse, even civil war would be possible.
The mini-Bot then is an attempt to avert that. Sure, savers will lose money. But in reality that money has already been lost. As an aggregate, what Italian savers think they have is a lot more than what they really have. A mini-Bot will crystallise the losses, return sovereignty to Italy and give the government a chance to avert the disaster that could occur if it were to formally default.
Back Salvini on this one.
So OK? maybe it was a mistake for Italy to join the eurozone in 2002, but now, as they have joined, it would be crazy harmful to quit.
Now as they have joined, staying in the Eurozone is the only way if they dont want again continous devaluations. so what is the only way? what a reasonable politican, who is responsible would do? Lessen corruption, competitiveness, what Finland has done in the 90s.. This is the only way. Otherwise, the nice, shining italiy will be a poor noman’s land and the north will get as poor as the south also. Instead of, they should have a very strict, (like the Finnish did) monetary policy and they should have responsible politicans.
Not to mention that everyone, the whole country will be much poorer suddenly, if they quit the eurozone. What about italian savers? If i would be italian, when hearing these news, ideas, i would take out my money from italian banks and put them to rich North, core eurozone.
Do you think that people, italian Savers (League’s voters are mainly from the rich North) will forgive Salvini that they are taken back to the previous centurty, being much poorer? This is nonsense, it can’t happen. If Salvini does this, he is lost.
Does Italy have savers? Quaint place, that Old Country……
Huh, savers are so last century. In Eurozone, bank charge interest to keep your money. Where do you put your savings, mattresses?
“I am a bit confused also. this minbot , i assume will be pegged to the euro ? will it be convertible ? devils in the details.”
Not pegged to the Euro I do not believe. Italy cannot mandate acceptance either. But It will issue them and accept them as payment for taxes (just not taxes owed in euros). By accepting them as taxes – for payments and transactions in the minibot, they guarantee acceptance.
How does it work? Government pays some state employees in them instead of euros.
Time for DB to move their Italian bonds to the bad bank.
“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 thing about pegs is that eventually they are broken. The dollar is no longer pegged to gold, either. Question is, how does one meet rules if they have never been followed?
“A crisis is brewing in the Eurozone and it’s not even on mainstream media radar.”
Is it not on the mainstream media radar or is the MSM blocking the radar signal from public view? The MSM is propaganda.
If in the EU, the euro is the only legal currency, how will they deal with all of the new crypto currencies like FB is launching?
If FB can have a currency, why not Italy or each State in the US?
I’m lost in what is currency and from where it gets value.
Government backed currencies have a “legal tender” status that the others do not. So while no one is forced to take dollars or euros for any good or service, they are forced to accept them for repayment of debt. That gives the currencies at least some value that bitcoin does not enjoy.
All fiats fail eventually.Gold/silver on the other hand……..
“i assume will be pegged to the euro ?”
Whatever anyone tells you, if something is issued separately, there can be no peg that is always and everywhere defendable.
I can see no reason for having the mini-Bot other than to step for Italy to make to get to using a currency other than the Euro. And that means a currency that floats against the Euro.
EU freeloaders are chafing under the rules that prevent them from printing their way to prosperity. There is no end to foolishness.
Euros and Confederate Dollars soon have a lot in common.
Well, never say never but I don t think the european fairy tale will fall apart just yet; the ECB and the EU will have to give in(with the emphasis on ‘give’=print) the EU freeloaders bunch will struggle like devils in holy water(flemish expression) to safeguard their parasitic overpaid existence….won t they ?
Italy is one of a handful of European nations that generate net contribution to the Eurozone. France has struggled just as much and yet is never penalized? No, the only parasites and filthy greasy thieves are Germany and France.
And exactly how are the Germans the problem here? Are they fiscally profligate like the French and Italians. Their only dumbass mistake was for German banks to give loans to these irresponsible countries.
Trump once said….when you owe the bank 100,000, they OWN you. When you owe the bank 100Million…you OWN the bank. That is, you can ruin the bank. That was DUMB for the Germans to loan that money.