How much would businesses and households lose if Italian banks, to comply with the diktat on capitalization issued by the EBA (European Banking Authority) on behalf of the Franco-German directorate (but where was the Berlusconi government then?), had to cut credit by 50 % ? The beauty of 76 billion euros just by estimating the effects of the EBA ax on Mps, Unicredit, Banco Popolare. Reuters did the math, which also calculated the mildest hypothesis, i.e. that the capital strengthening requested of Italian banks takes place 80% through capital increases and only 20% through credit reduction: in this case the Italian economy would receive about 40 billion euros less in the next six months.
Is such a hypothesis tenable for an economy that has already entered a recession and promises to stay there for a good part of next year and what can be done to avert it? A suggestive but far from outlandish answer, even if it is not the only possible one, was advanced yesterday in the columns of the Corriere della Sera by Federico Fubini who suggested that he treasure the American lesson of the Tarp.
Basically, the Bank of Italy could contribute to strengthening the capital base of Italian banks by giving them part of its gold reserves which are worth about 100 billion euros. In this way the banks, in addition to complying with the EBA directives, could increase capital without having to cut credit. In return, however, the credit institutions - to which the ECB has guaranteed unlimited liquidity for three years if they prove to be solvent - should sign a kind of pact of honor with Bank of Italy, committing themselves to using part of the means at their disposal to buy BTPs. Nor would the banks, the state, businesses, families and the Bank of Italy benefit, which, once the crisis is over, could obtain a capital gain from the transfer of gold reserves.
Naturally it is not the only possible solution to square the circle and perhaps we could also rethink the possibility that Bankitalia buys back the banks' shares in the Via Nazionale institute at adequate prices, also eliminating quite a few conflicts of interest for formal as they are. Certainly the values in the field and the necessary times would not be the same but one path does not exclude the other. The important thing is not to give up in the face of obstacles and not to bring the Italian economy to its knees.
