What is a mini-BOT?
The current Italian government, last year, put forth a parallel currency proposal the so-called mini-BOT. According to this proposal :
- Mini-BOTs will be a type of IOU that will be issued in paper form and small denominations (€1 to €500);
- They will pay no interest and have no maturity;
- The government would use mini-BOTs to pay public arrears; and
- Mini-BOTs could be accepted as a legitimate mode of payment to settle energy bills or buy train tickets or other goods and services supplied by publicly owned companies.
Mini-BOT in the government programme of the Five Star Movement and the League
Francesco Papadia, Alexander Roth – Bruegel<
Do mini-BOTS lead to Italeave?
Perhaps unsurprisingly, Italy looks to be in violation of EU budget rules – which require an overall fiscal deficit of less than 3 percent of GDP. This brings us back to the mini-BOTs: an attempt to pay the government’s bills without exceeding the agreed-upon deficit limits. The problem is that mini-BOTs are much more than just a mechanism for evading the rules. The printing and use as a means of exchange of such paper bank notes from €5 to €500 euros would be the first step in leaving the euro.
The source of Italian discontent:
Italeave: The Renewed Threat of a Parallel Currency
By: Stephen G. Cecchetti, Kermit L. Schoenholtz – Brandeis University, New York University