Perpetual Bonds, as in wartime, to ferry Italy out of the crisis. This is the proposal launched on Tuesday by the president of Consob, Paolo Savona, on the occasion of the annual meeting between the Commission and the financial market, opened in the morning byspeech by the President of the Republic, Sergio Mattarella.
"The solidity of Italian savings - said Savona - is a necessary but not sufficient condition for resources to flow towards productive capital", for this reason the issue of "irredeemable public bonds, a typical instrument of the war phases, would be desirable, in which the health event has often been compared.
These securities, explained the number one of Consob, "could recognize an interest rate, tax exempt, equal to the maximum inflation rate of 2% which the ECB has undertaken not to exceed in the medium term". Subscription by savers "would obviously be voluntary and the offer quantitatively open".
ITALY: NOT A PROBLEM, BUT A RESOURCE FOR EUROPE
As for Italy's position in the EU context, according to Savona “our country does not represent a financial problem for the rest of Europe and the world, but a savings resource that foreign countries draw on in various forms for its growth. Italy does not lack real solid foundations, but their proper consideration is scarce”.
On the side of the spread, "the recent and wide fluctuation as a consequence first of the uncertainties that arose following the pandemic crisis and then of the vigorous monetary intervention, confirms the changeability of confidence", which the State has the task of keeping under control. This will be possible "if the European authorities and supranational institutions counter the distorted assessments of the market - said the number one of Consob - as they are already doing for the stability of sovereign debts, emphasizing the relevance of broader and more valid indicators".
FAVOR POPULAR SHAREHOLDING TO AVOID STATE RETURN
Savona also suggests facilitating the formation of risk capital to replace debt: "The solution of making risk capital benefit from the state guarantee, within predetermined limits and conditions, but implemented quickly and in clear and simple forms - underlines – would avoid an unconsidered return of the State to businesses and would allow small savers to enjoy guarantees capable of eliminating the risk of their choices for a predetermined period”.
Savers, Savona went on to explain, “would also benefit from the advantages of a recovery in production by the companies to which they entrust their savings should the investments be successful. The State would certainly spend less than it does by providing non-repayable subsidies, including those intended for companies that have no chance of survival; it would also make entrepreneurs responsible for making good use of the savings obtained, limiting moral hazard. This solution would also make it possible to anchor finance once again to real activity, in line with the objective to be pursued with the new institutional architecture”.
In this regard, concluded the president of Consob, “an experiment could be immediately launched starting from the 22.058 medium-sized enterprises, giving initial preference to the 10.838 already exporting and to those intending to become so by presenting credible plans. The State could facilitate the formation of their own capital by investors, including non-institutional ones, to favor popular shareholding as required by the Constitution, guaranteeing an average unit amount of 1 million euro; once the objective has been achieved, the burden would fluctuate from a minimum of 11 billion to a maximum of 22, which would immediately enter the production circuit, with positive effects on financial leverage”.
