Why and how to start a national parallel digital currency in Italy, and why it would work – fast

Trond Andresen

Chapter 12 in Central Banking, Monetary Policy and the Political Economy of Dollarization, 2025, pp 293-304 from Edward Elgar Publishing

Abstract: This chapter is an updated version of one in the Real-World Economic Review, in 2015. It was written when Matteo Salvini's EU/euro criticism was still strong and widely covered – creating hope for many EU- and euro-opponents in Italy and elsewhere. Much momentum has since been lost, but the proposal presented is just as feasible and needed today. Italy is used as an example, but the proposal can be applied in any eurozone country. Because eurozone countries majority opinion either support the euro or are afraid of leaving it, I propose a national digital parallel currency, primarily mediated via the mobile phone network. Such a currency is not illegal under EU legislation, and government debt in it is not impacted by Maastricht rules. It can be introduced gradually by the government, while its spending and taxation in euros continue. The new currency will soon gain confidence through increasing use and positive feedback processes, and has negligible financial risk. The Central Bank is not involved and runs its euro business as usual. The currency is issued and run under the Treasury, which – following Modern Monetary Theory – may create the currency ex nihilo and also run government deficits in it when needed, thus freeing itself from today's straitjacket of euro borrowing in the financial markets.

Keywords: Dollarization; Central banking; Monetary policy; Euro; Italy (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803925325
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