Enter the mini-BOT

Author: IFLR Correspondent | Published: 8 Aug 2019
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This year – initially meant to be the UK's final au revoir to EU membership – was always going to be awkward for the Commission.

The trading bloc dealt with Britain's extension, yet now faces the premiership of Conservative leader, Boris Johnson, fresh from years of blasting the continent in an attempt to present himself favourably to eurosceptic, Conservative MPs.

Elsewhere, things have grown less and less comfortable amid the standoff between the EU and Switzerland. As the bloc becomes ever more protectionist to preserve the integrity of the internal market, Switzerland has lost its stock trading equivalence status, a third country perk enjoyed by further afield countries such as Japan and Australia. Neither the Swiss nor the EU have yet backed down as IFLR goes to press, and it looks as if it will be a while before a new agreement is ratified between the two that can satisfy each side.

Brexit fatigue, along with electing fresh faces to the new European Parliament, has largely kept Brussels busy – meaning most haven't had time to fret over Italy's ever more agitating tactics. It would be an understatement to say that the Italian government, a coalition between nationalists Lega and the populist Five Star Movement, is eurosceptic. Neither parties trust Brussels, and both largely blame the euro for Italy's financial troubles. Enter the mini-BOT.

The mini-BOT stands for a small denomination, Mini Bill of Treasury, and can be issued by governments (in this case, Italy) to act as a domestic currency. It can settle government debts and pay taxes, among other things.

Originally touted by Greek economist and former finance minister Yaris Varoufakis, it was initially viewed as a way of hoisting Italy's maritime neighbour out of its seemingly everlasting financial woes.

It acts as a parallel currency and would be circulated purely domestically – unlike the euro – with the intention of reflecting the Italian economy better than the euro does in its current state. Italian politicians feel that at present the euro is tied too closely to Germany, which makes it overvalued and detrimental to Italy as a result.

Italy is one of many states that have struggled with the universal currency.

Other Mediterranean countries such as Portugal and Spain have also had their problems.

Should Italy's government go ahead and introduce mini-BOTs into the domestic economy, it raises the potential of other countries doing the same in an attempt to separate themselves from the consistently predicted economic downturn around the corner.

The big question is how the European Commission will approach this. Broadly speaking, the motives of Brexit are sovereignty-related. The same sentiments are felt by the populist and right wing parties that have flourished all over the continent, even in traditionally European economies such as that of France, the Netherlands and Germany. Should they respond softly, they risk undermining the European project, and should they come in hardline, they could set off wildfires that risk dissolving the europhile boost that has both contributed to, and followed, the turmoil of Brexit. Watch this space.