Italy’s main opposition parties call for parallel currency to coexist with euro

TheEuropeanCentralBank /

FT — Italy’s leading opposition parties are calling for the introduction of a parallel currency to the euro, which they say will boost growth and jobs.

Three of the country’s four largest parties – the Five Star Movement, the Northern League and former prime minister Silvio Berlusconi’s Forza Italia – have proposed introducing a new currency following an election scheduled for next year.

Media attention to the parallel currency war re invigorated this week because of an interview with Silvio Berlusconi (a longstanding proponent of the idea) in Italian publication Libero Quotidiano,where he argues the introduction of a national parallel currency will help Italy regain monetary sovereignty in a way that later supports domestic demand.

The proposals for a parallel currency have replaced the opposition parties’ previous calls to leave the euro completely.

By settling on a dual currency, analysts say the parties hope to appeal to anti-euro sentiment in the country while avoiding, for now, the upheaval of an outright exit.

While some lawmakers have said the primary goal of the new currency is to persuade Brussels to change European fiscal rules to allow them to spend more and cut taxes, others backing the scheme have admitted they hope it will help make an eventual euro exit more likely.

The proposal is opposed by the European Commission, which says there can only be one legal tender in the eurozone.

When the euro was introduced in Italy in 1999, it enjoyed widespread support. However, this has since waned, with many blaming the single currency for drops in living standards and rising unemployment.

As the election nears, and with opinion polls currently pointing to a hung parliament, only the ruling Democratic Party is not proposing changes to the current euro set-up.

FT reports that according to Citi’s analysts more than two thirds of Italian voters currently support parties with an anti-euro stance.

That makes Italy a much greater source of potential European Union instability than most people appreciate. Not least because if Italy can go parallel, so can other countries.

What this means for the wider ECB system isn’t certain. There’s no guarantee an Italy currency offshoot will be successful just because the government initiates it. As with all successful currencies  it’s ultimately the users who will determine its success.