(of Admiral div. res. Nicola De Felice and Massimiliano D'Elia) The government is waiting for solutions from Europe to find the necessary funds to face the next emergency that is already on the horizon, the economic one. In the meantime, the EU Commission has suspended the Fiscal Compact and the ECB has purchased Italian bonds worth € 15 billion (see case the amount of the amount paid by Italy to date for the Mes - Save States Fund).
The Prime Minister, Giuseppe Conte yesterday heard the president of the EU Commission:
This afternoon I had a telephone conversation with the President of the European Commission Ursula von der Leyen. In the course of the conversation, President von der Leyen was keen to anticipate, in particular, the two initiatives that will be submitted to the Commission for approval tomorrow in her collegiate session, and which I hope will be included in a wider European strategy (European Recovery and Reinvestment Plan), to be completed in the coming days, to face the serious emergency that we are all facing.
A 100 billion instrument to support national measures aimed at fighting unemployment and fueling the layoffs.
Allow Italy and other states to use the European structural funds not yet spent with the widest flexibility: without the constraints of national co-financing or of particular functional or territorial destinations.
This is undoubtedly a significant step in view of a broader and more comprehensive intervention which will - in our opinion - give the sense of a strong, cohesive and credible European response to this epochal challenge.
The solutions that President von Der Leyen will propose to the Commission refer to measures still to be agreed in order to allocate 100 billion euros immediately. Then, in addition, reference is made to the use of the structural funds not yet spent, released from the constitutive prerogatives. Le oppositions have assessed and asked the government at least 100 billion euros to manage the emergency and relaunch the economy of our country. Even if it would take at least 400 billion euros. Merkel has already allocated 550 billion euros for her Germany, announcing that she is willing to bring them to 1000.
The European institutions, probably initiated by some EU countries, apparently, would be unwilling to evaluate any emergency initiative, released from conditions of return.
In Europe, following the pandemic, in fact, two opposing sides. On the one hand there are Italy, France, Spain and Portugal which propose new financial support solutions, linked to the ongoing emergency, on the other Germany, Austria, Holland and Finland which, on the other hand, lean towards existing institutions, which are disadvantageous and very conditioning for us, such as the Me - Fondo Salva Stati. The Prime Minister, Giuseppe Conte last night, during the press conference on the sidelines of the live unified network TV, made it clear that using the Mes as it is will never be accepted by Italy. Conte also specified that the Mes could be one of the measures from which to draw, only if the rules currently in force are revised and that have little to do with the effects of the emergency in progress.
Institutes, those supported by the Nordic countries, expected under normal conditions. It has not been understood that we are at war and that, therefore, high-impact measures are needed to avoid pandemic socio-economic problems. The issue of financial instruments for a joint and several debt. There has been talk of Eurobonds, coronabonds but also of war bonds.
War Bond
While euro bonds are tied to projects and financed only for investments characterized by the low cash of the European Investment Fund, with short and medium term maturities, war bonds can be guaranteed by the Bank of Italy with unlimited times. The idea of an extraordinary issue of treasury bonds for Italians, entrepreneurs, families and Italian investors could be successful, with advantageous taxation, with incentives, economic aid and credits for those who subscribe them. Like the securities issued during the last world war, with an amortization period of 40/50 years. To be issued at a value of 75 cents for each euro of nominal value, being repaid at par in long times, with the interest rate favorable to the buyer. The available cuts could be of € 25, € 50, € 75, € 100, € 200, € 500, € 1.000, € 5.000 and € 10.000, not transferable. The guaranteed minimum rate of 4%. Thus, the ECB can subscribe for hundreds of billions of Italian government bonds. The assets would be avoided and the savings, jobs, pensions, hospitals, ports or airports of the Italians would not be put at risk. The public debt will rise, but we are in an emergency! "
In order not to burden the public debt, another path could be pursued.
The ECB could favor the issuance of war bonds (WAR BOND) according to objective criteria, such as taking as reference the Gross Domestic Product (GDP) of each country. Establish a maximum percentage beyond which it will not be possible to go: like 20 percent of GDP which for Italy is equivalent to about 400 billion euros.
Of course, the injection into the economy of this type of huge fresh financial resources will have to be conditioned. The various user countries will be able to use the resources only for the needs related to Covid-19, including the subsequent phase of reconstruction and reinvigoration of the economy.
Projects aimed at reshaping the architecture of the national health system in the field of pandemics must be privileged, without forgetting the development and modernization of strategic structures such as roads, highways, ports, airports, telecommunications, digitization, etc.
The value of these WAR BONDS must not be calculated in the calculation of the public debt of the individual countries, since it must be released from the rules of ordinary financial statements as it is the result of an extraordinary measure that must follow, for this solidary reason, extraordinary repayment paths. Anyone who will not be able to meet deadlines and structural plans must pay the issuer a minimum penalty percentage, for example equal to 2 percent of the total amount for each year of delay.
In doing so, a virtuous circle will be created, jobs and tax revenues will increase for the benefit of the State, which could thus pay its ordinary and possibly even extraordinary debts.