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The autarkic BTP locks down Italy: the League relaunches

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The autarkic BTP locks down Italy: the League relaunches

E Giancarlo Giorgetti’s League is now betting on the autarkic BTP, a special BTP: as stated in an article in the newspaper La Repubblica, “a little Btp Italia and a little future Btp; in addition, with the tax advantages of the Pir, the individual savings plans that do not charge capital gains and other heavy taxes for those who keep them in their portfolio for at least five years”.

Why self-sufficient?

Because the new BTP would be intended only for natural persons residing in Italy. Objective: a BTP that is able to incentivize, as the economy minister Giancarlo Giorgetti himself said, the “direct involvement of Italian savers”.

From the Ministry of Economy and Finance, La Repubblica reported, for now we are referring to a “political intent”which is practically the one manifested several times by various exponents of the political and non-political world, relating to the need to bring the Italians to bear the monster public debt that haunts and conditions Italy for too many years.

A sort of call to arms, which the number one of Intesa SanPaolo himself also recently spoke about Charles Messinaand which had previously also been launched by the president of Consob and former minister Paul Savona.

Giorgetti: increase direct involvement of savers

In the hearing on the programmatic lines of the Ministry that he leads, Minister Giancarlo Giorgetti clearly addressed the issue of the Italian public debt:

We are very keen on the participation of Italian savers in the purchase of the country’s public debt”. Giorgetti said in the speech he gave two days ago.

Up until the end of the 1980s and beginning of the 1990s, the high rates of inflation and the consequent high yields offered by government bonds, combined with the still underdeveloped domestic financial market, meant that the percentage of public debt held by domestic savers was more than 20% of the total”, recalled the number one of Via XX Settembre.

“However – Giorgetti continued – the decline in yields (and the cost of servicing the debt for the issuer) resulting from the control of price dynamics and convergence in the single currency area, accompanied by the continuous growth of public debt as a whole, has produced a continuous and marked decrease in this percentage of participation, until falling to 6.4% in 2021 ″.

The introduction, in 2012, of the first government bond designed for retail savers, although not exclusively for them, the BTP Italy, and innovation in 2020 with the Future BTPson the other hand reserved exclusively for retail savers, initially slowed down the rate of decline and then led, in the current year, to the first sign of a trend reversal”.

Furthermore, in recent months, alongside the successes in the placement of instruments expressly created for them, there has been a renewed participation of individual savers also in the placement of traditional government bonds in periodic auctions of BOTs, BTPs and CCTslargely thanks to the increase in the nominal yields of the emissions”.

In this context, it will be important to continue the commitment to increase the direct involvement of Italian saversthrough new specifically designed financial instruments, which combine the simplicity and solidity represented by government bonds with a remuneration that is able to preserve the real value of savings”.

Again the Minister of Economy of the Meloni government:

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From the point of view of public debt management, the increase in the share of debt held directly by Italian savers would constitute an important factor in reducing the volatility of returns, acting as a stabilizer of the typical fluctuations in times of greatest financial stress. For this, the design of specific products for retail which also have forms of rewards and loyalty for savers who have already purchased government bonds and who hold them until maturity, is a central element in the overall public debt management strategy”.

Autonomous BTP: the initiative of Giulio Centemero (Lega)

Let’s go back to the hypothesis of an autarkic BTP mentioned in the newspaper The Republicnoting that “the suggestion of the ‘particular’ Btp pleases the League”.

An explanation of why and of the form that the autarkic BTP would have was given to the newspaper all the same Giulio Centemeropromoter of the idea, which had already presented during the last legislature a bill close to the idea that the League is once again cherishing: that, precisely, of special Treasury bills.

So much so that, as soon as the new legislature began, Centemero proposed the “Rules governing the issue of special multi-year Treasury bonds”, assigned on 10 November last in the seat of reference to the Budget Commission of the Chamber.

The aim is to get citizens to invest – Centemero told La Repubblica- just think that on current accounts cash is equal to seven times the Pnrr: if even half of it could be channeled into the real economy, the effect would be enormous”.

BTP for Italians only: the maxi tax discount

Talking about the Centemero initiative has also been in the last few hours The printwho dedicated an article to the BTP for Italians only.

According to the first indications, the initiative that bears the signature of the Northern League deputy Giulio Centemero foresees a ceiling of 30,000 euros for the subsidy. Centemero had already presented the proposal in the last legislature. The security must be kept in the portfolio until maturity. The hypothesis is of durations at five and ten years”.

The newspaper again:

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The tax break is not the only incentive thought up by the League. The mechanism also provides a double coupon for investors who will keep the BTP until maturity. The amount will be determined exclusively in relation to the positive trend of the Italian GDP”.

La Stampa confirms the nature of the autarkic BTP: it would be an instrument that could be subscribed “only by natural persons residing in Italy” and the product couldn’t be shorted, so it couldn’t be “object of short sales”.

“In this way the new BTP reserved for Italians would act as a barrier to potential speculative waves on our country’s debt“.

On the other hand, right now, we add, the risk of speculation on BTPs is certainly destined to increase, given that the bulwark of the ECB, which with its quantitative easing hoarded our government bonds, as well as those of other countries in the euro area, not only no longer exists, but is destined to be replaced soon by the its opposite, i.e. by QT-Quantitative Tightening: the new threat especially for Italy ‘promoted’ and promoted in particular by Germany and Holland.

In this regard, the president of the Bundesbank, the central bank of Germany, Joachim Nagelunderlined the urgency that the QT start at the beginning of 2023: in this way, according to the German banker – hawkish like my Dutch colleague – the ECB would confirm “Strong Determination” to bring down inflation, while continuing to launch “mosse decisiveon interest rates.

Nagel went even further, asking the stop of reinvestments:We should start reducing the size of bond holdings early next year, no longer even doing full reinvestments of all bonds that mature.”.

Including the €3.3 trillion in bonds it holds under the APP programme, the ECB holds a total of 5 trillion euros of BTP & Co.


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Would the autarkic BTP be listed?

Of autarkic BTPindicated as “coup of the League” the Libero newspaper could not fail to speak: “The League focuses on the so-called ‘autonomous’ Btp: it is about investments with maxi tax discount only for residents of Italy. The Carroccio deputy, Giulio Centemero, filed the bill on ‘special’ Treasury bills. The proposal is for inflation-linked fixed-rate securities with generous reliefs, but which block foreign capital at the border”.

La Repubblica underlines that no decision would have been taken in this sense: here too the maxi tax discount of this hypothetical instrument is highlighted, which would combine the “characteristics of vouchers designed for retail and already existing” i “tax advantages of PIRs, individual savings plans (generally made up of mutual funds, but not only): therefore, no capital gains taxation.

“More, income deduction (therefore from Irpef, because they are instruments reserved for natural persons) of 30% of the invested capital, up to a maximum of 30 thousand euros”.

Paolo Savona and Carlo Messina’s BTP proposals

Autarkic BTP, special BTP, war BTP: different names depending on where the idea comes from which, in recent years, have confirmed the wish of the institutions to involve Italians in the purchase of public debt, a thorn in the side of the Italian economy.

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All the proposals have always referred to wealth of the Italians, to the huge savings of Italian families, parked in the bank.

In June of 2020, the president of Consob Paolo Savona called Italian savers to the rescue proposing war BTPs and popular shareholders, flaunting the proposal of the irredeemable BTPs. As in the war phases, to be precise.

To be precise, Paolo Savona advised to act in two directions: a) issue irredeemable public bonds (consols)a typical instrument of the war b) to facilitate the formation of risk capital to replace debt.

A proposal similar to that of the autarkic BTP was also waved several times by the CEO of Intesa SanPaolo, Carlo Messina: in 2021, Messina gave a speech in which he underlined the need for a support of Italian savings to the public debt.

The savings that exist in Italy must support the Italian public debt”said the number one of the Italian bank, specifyingit is not a sovereign measure, but a way to maintain strategic margins of freedom”.

Carlo Messina relaunched the proposal a few days ago, in an interview with La Stampa, sparking quite a few controversies, when he called for investment in Italian government bonds by capital abroad: Do you have two billion abroad? One you invest in securities of your country.

And with regard to the sovereign nature of the autarkic BTP, this was highlighted by an article in the Huffington Post:The League wants sovereign BTPs: the proposal for government bonds reserved only for Italians

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