Debt status of Italian mini-BOTs in doubt

Author: Olly Jackson | Published: 11 Jun 2018

The decision as to whether Italian mini-buoni ordinari del Tesoro (or mini-BOTs, an Italian Treasury short-term credit note) are a liability could be crucial for Italy’s future in the EU and their fiscal performance.    

"The mini-BOT might be an option for Italy to pay back arrears more quickly, but there are all sorts of issues on potential implementation," said ING associate economist Carlo Cocuzzo told IFLR.

Italy risks conflict with the EU if the issuance of mini-BOTs is relied upon as a tool for fiscal expansion. But for now, the country’s economic fragility is a local issue which is not expected to destabilise the eurozone in the short-term.

Following the end of Italy’s political deadlock, Five Star Movement and League revealed plans to issue mini-BOTs, securities to pay off companies and individuals owed government money. These instruments could then be accepted for tax payments or, in the future,...