Biagio Bossone, formerly at Banca d’Italia, the IMF, and the World Bank, an international financial consultant and Chairman of the San Marino Banking Association and a member of the Group of Fiscal Money, Italy, comments on an article in the Financial Times by Martin Wolf.
“Mr Wolf agrees that the fiscal money proposal that we have developed and promoted for years is technically possible, albeit that “it would surely create hysteria in Northern Europe”. Well, it shouldn’t.
“Fiscal money would be issued as transferable and negotiable bearer bonds, which recipients would be entitled to use for tax rebates two years after issuance. Such bonds would carry immediate value, since they incorporate sure claims to future fiscal savings, and would be immediately exchangeable against euros or usable as payment instruments in parallel to the euro.
“Under European accounting rules, they would not constitute public debt. Fiscal money would be allocated, free of charge, to supplement employees’ income, reduce enterprises’ tax wedge on labour, and fund public investments as well as social expenses.
“Fiscal money is sometimes wrongly characterised as the anteroom of Italexit. Quite the contrary — it provides a way to overcome the eurosystem’s dysfunctionalities that condemn the Italian economy to a permanent state of depression”.
Fiscal Money has been proposed to the Italian government to boost aggregate demand and increase GDP without increasing public debt
In Social Europe, journalist Enrico Grazzini examines the main differences between various proposals:
- Fiscal Money or Tax Discount Bonds (TBDs) are issued by the state and backed by the future tax revenues. TDBs would be assigned directly to the households, companies and (only pro quota) to government administrations as the best, and maybe the only way to overcome the liquidity trap and the austerity constraints.
- Helicopter Money involves a central bank dropping free money straight into people’s pockets, recently advocated by many economists (such as Eric Lonergan and Martin Wolf, chief economics commentator at the Financial Times) as the very best solution of last resort to increase demand and face the next possible crisis.
- and Quantitative Easing for the People, proposed by Labour Party leader Jeremy Corbyn, who would like the Bank of England to issue new money to finance a state bank and public investment as the optimum way to expand the British economy in an equitable way.
Bossone summarises: “Fiscal Money would allow Italy to expand domestic demand and improve enterprise competitiveness, while avoiding any increase in public debt and breaches of the fiscal compact. In fact, it would make debt sustainable, reversing the effect of years of austerity, and would remove any inducement for the European Central Bank to withdraw Mario Draghi’s “whatever it takes” pledge”.
For more information go to: https://monetafiscale.it/english-version/, https://www.zerohedge.com/news/2017-10-15/italys-parallel-fiscal-currency-all-you-need-know and https://www.socialeurope.eu/fiscal-money-better-helicopter-money-qep-beating-deflation-austerity