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Europe, Germany, Greece, Italy

A new ‘fiscal’ currency to tackle the Eurocrisis, from Greece to Italy

Enrico Grazzini

To overcome the crisis the new Greece’s Minister of Finance Yanis Varoufakis is considering a new national ‘fiscal’ currency to that proposed for Italy by myself and my colleagues Luciano Gallino, Biagio Bossone, Marco Cattaneo, Guido Ortona, Stefano Sylos Labini (Helicopter Money per l’Italia: uscire dalla crisi con l’emissione di nuova moneta statale-fiscale complementare all’euro” “Helicopter Money to Italy: exit the crisis by issuing a new fiscal currency complementary to the euro)” [1].

Varoufakis proposes the introduction in the peripheral countries of Europe FT-coins (FT stands for Future Taxes), government paper with a tax value similar to the Tax Credit Certificates (CCF) we have proposed in Italy for the payment taxes.

Varoufakis writes: “Is there something that the peripheral countries can do to give themselves a chance to breathe better and to act as a bargaining chip that will make Berlin, Frankfurt and Brussels take notice?The answer is yes: They can create their own payment system backed by future taxes and denominated in euros…  Let’s call this system FT-coin; with FT standing for… Future Taxes.

Bitcoin-like currency?

FT-coin could be run by a Bitcoin-like algorithm designed and supervised by an independent non-governmental national authority. Just as in the case of Bitcoin, the total amount of FT-coins can be fixed in advance, at least in relation to a variable not in the government’s control (i.e. nominal GDP),

The great advantages of such a scheme is that it creates:

  • a source of liquidity for the governments that is outside the bond markets, which does not involve the banks and which lies outside any of the restrictions imposed by Brussels or the various troikas
  • a national supply of euros that is perfectly legal in the context of the European Union’s Treaties, and which can be used to increase benefits to society’s weakest members or, indeed, as seed funding for some desperately needed public works
  • a mechanism that allows taxpayers to reduce their inter-temporal tax bill
  • a free and fully transparent payment system outside the banking system, that is monitored jointly by every citizen (and non-citizen) who participates in it.[2].

The CCF we propose in Italy are state credit notes valid for paying any future financial commitment to the public administration (state and local taxes, fees, fines, etc.) after two years from the date of issue. These securities are distributed free by the state to workers and businesses, and are immediately convertible into euro. The CCF can immediately provide citizens and businesses with strong purchasing power. So you can create new demand and boost production.

The so-called ‘expansive’ austerity policies are insane and suicidal. They serve only the elite of Germany. There is a real risk that Italy – where the increase the ratio of government debt to GDP is continually increasing – may be in a similar situation to that of Greece, and fall in the claws of the Troika (EU, ECB, IMF). With one major difference: no one will ever negotiate the Italian public debt, because it is too big and it is in the hands of private banks – while the Greek debt is ten times smaller and is in the hands of public institutions. Italy will never exit the crisis by asking to renegotiate its debts [3].

In contrast, with the new fiscal currency, by boosting demand Italy, Greece and peripheral European countries can get out of the liquidity trap and create the conditions for economic recovery. Our proposal to create an Italian fiscal currency has therefore international reach. Indeed Varoufakis is not the only one in Greece favourable to it. The new Greek labour minister, Rania Antonopouloupotrebbe may pursue the solution indicated by Rob Parenteau, advisor to the Greek government.

Parenteau intends to exit austerity without leaving the euro thanks to an (almost) fiscal currency (similar to our CCF) which he calls Tax Anticipation Notes [4]. The TAN is legal tender for the payment of taxes but it also works as a means of payment, ie as money.

The minister Antonopoulou appears favourable to employing the TAN to pay for public works and start a New Deal with 300 000 new jobs. Both Yanis Varoufakis and Rania Antonopoulos – which has close ties with Rob Parenteau, both belonging to the Levy Economics Institute [5] – are in favour of the proposals to issue a fiscal currency.

The Greek government could carry this out in two phases, in order not to disturb unduly European institutions and markets with such a highly innovative project as the new currency that would be complementary to the euro. First of all, the government is negotiating to lighten the debt to foreign creditors. This is by far the most pressing and dramatic issue. It should be clear: with 175% debt to GDP Greece is already a failed state (unlike Italy). It absolutely must drastically reduce its foreign debt, in one form or another, if it  wants to survive as a nation. A deal on the debt is very difficult but it is certainly worth the attempt  to bring it about. No one knows how the negotiations with Berlin and Frankfurt will end.

If negotiations fail Athens would return to the drachma. If instead there is some kind of break through, Tsipras, after renegotiating the debts, could introduce the CCF or TAN, or FT  if you prefer, or other similar types of fiscal currency to boost the economy, start a New Deal and increase employment.

Lessons from Greece

What lesson does Greece gives us in Italy? Since the architecture of the euro-mark born in Maastricht is intrinsically and structurally deflationary, imposing a balanced budget and stifling less competitive economies, it is necessary that the states in crisis themselves emit a national monetary instrument parallel to the euro in order to make the economy grow. To overcome the liquidity crisis John Maynard Keynes proposed extracting money from [the digging of] holes, Milton Friedman to throw money from a helicopter. But the concept is similar: it is necessary to issue new currency to overcome the liquidity crisis. Just what the German government and the Bundesbank does not want.

In fact, the free distribution of a fiscal currency that we propose is similar to a helicopter money, ie the direct introduction of a massive amount of free money in the real economy, although in our case from the state helicopter we wouldn’t throw notes and coins (because this is the monopoly of the ECB) but deferred tax credits.

The creation of CCF does not stand outside the European treaties because the CCF does not break the monopoly of the ECB (they are government paper), they do not produce debt – in fact they generate an increase in GDP that can recover the shortfall in tax revenues  due to the issuance of tax credits – and because they operate in the field of taxation that is still under the full sovereignty of the European states.

Mainstream economists are hoping that the European economy – the sick man of the world due to the euro-mark, a structurally deflationary currency – can recover thanks to quantative easing (QE). But the QE just announced by Mario Draghi, President of the ECB, cannot revive the real economy and create jobs. It will certainly inflate the values of the financial markets. In the best case it will have a (warm) indirect effect on inflation. However, it will take much more than this to restore the European economy and quickly bring it back to at least the pre-crisis level.

Draghi’s QE won’t work

Draghi’s QE will not work, while the helicopter money will. Helicopter money policies are entirely consistent with our approach to create and distribute money for workers and businesses.

To beat deflation and overcome the crisis, we propose that the Italian State – and other crisis-hit countries of southern Europe –  issue and distribute, in favour of workers and the self-employed and businesses, the quasi-currency, or government securities in the form of Tax Credit Certificates for deferred  use “.

The ECB cannot promote a policy of economic expansion because expansion and inflation are fiercely opposed by the German government.

But a fiscal currency has a double strategic advantage: on the one hand makes it is more flexible than the euro, introducing (almost) national currencies, and thus “reforming” the rigid system of the single currency, making it supple; on the other hand, in the face of the possible (or probable) chaotic  implosion of the eurozone, the fiscal currency prepares an alternative to the euro, that is a national currency.

Fiscal currency is certainly the more feasible way to restart Italy and create the conditions for a new sustainable model of development. The other solutions currently proposed by the left or by Beppe Grillo’s Five Star movement – which is calling for a referendum on exit from the Euro – are less effective or totally preposterous.


– Unilaterally to exit from the euro is the most simplistic response in the face of disasters of the single currency. But half the population is against it, and exit would be a leap in the dark, both economically, financially and politically. The euro is in fact the second reserve currency in the world and all countries of the world – including China, Russia and India – will have big problems if it disappears. Certainly if the crisis worsens, as it is possible and even likely, then we would be forced to leave the euro, but this not a decision we would take but which would be forced upon us by international markets.

– A planned exit by several countries from the euro, as suggested, for example Stefano Fassina, at present has no concrete perspectives. France and Spain have different interests to Italy. Germany benefits from the euro and will never agree a controlled exit. If the crisis worsens, we would exit alone.

– Obtain a moratorium on our debt is impossible for Italy which is among the top ten industrial powers and has the second largest public debt in the world. The insolvency law is sacrosanct, theoretically [6]. But it doesn’t take a genius to understand that if Italy demanded a restructuring of its debts it would be immediately expelled from the euro or would end up under the control of the Troika. Our debt will not be forgiven. Italy is not Bolivia, Guinea Bissao and even Greece.

– The most intellectually acute and profound among the left teach us that our problems are not monetary,  but historical structural problems: the lack of technological competitiveness, the unequal distribution of income, tax evasion, etc., etc. We agree, of course, the problems are structural. But when the patient has a high fever because of the plague, you need to first lower the temperature before trying to cure the disease. Otherwise the patient just dies at which point the (required) structural remedies are superfluous. The currency is not secondary in saving an economy and a country. After Keynes, to ignore the central role of money in the economy is a mortal sin.

– Then there are the zealous Europeans that indicate firmly that to cure the European economy of its illness it is necessary to “supersede at the European level the role of nation-states” [7]. Should we then simply erase national democracies born of decades of hard battles and democratic struggles because “the forces of the left should work for a new European governance [8].” They remain wedded to recipes that year after year have been ignored: restructure debts, reform the ECB, introduce mechanisms to reduce trade imbalances (ie prevent Germany exporting to Europe ), increase the federal budget, Eurobonds, give more power to the EU parliament, etc., etc. The problem is that it seems that the reformers are living on another planet: they do not realise that the European Union is very different from what they want, and has become the opposite of what was expected by the Founding Fathers. Give even more power to this Union means putting more into the hands of the German-led  usurers of international finance, and still more unemployment and misery. The United States of Europe – a goal that now nobody wants, neither Germany nor France, nor the UK or Sweden, etc., etc. – are no longer a generous utopia but an empty illusion cultivated almost exclusively within a section of the Italian intelligentsia. No one in the rest of Europe speaks more of a European federal state as a realistic political option. The illusions of this pro-European EU hurt the cause of Europe that might be less than the federal and centralist  ‘ideal’ but more cooperative and just.

Funding a New Deal for Jobs

The above proposals have a common terrible flaw: they are largely  made by politicians for politicians. The majority of Italians would not fight to support them. Realistically: who would fight for the reform of the ECB, or Eurobonds? Many citizens want instead to leave the euro, but the population would be divided between those who are for and who are against. We believe on the contrary that our proposal to issue a new fiscal currency for workers and businesses, of a New Deal for jobs, will not only be effective but could also quickly become very popular and find consensus among much of society.

Obviously a fiscal currency  does not solve everything. However it creates the best conditions to exit the economic emergency and re-examine in depth and from a position of strength the structural problems of our nation and those in Europe. First we must try to get out of the tremendous crisis in which we find ourselves, then we can try to address structural problems, the euro and Italy.

The currency is critical to the economy. In 1930s Germany Hjalmar Schacht invented the MEFO-Bond, a quasi-national parallel currency to deal with the heavy debt obligations imposed by the victorious Allies of World War 1. In a few years – despite the toughest international constraints, despite the huge debt and 25% unemployment  – Schacht unfortunately (because Hitler was in power) put the Germany economy back on its feet and cut rampant unemployment.

We believe that if the political forces and a courageous and ambitious government bring forward our project, the Italian economy could recover in a few years. And we also believe that our project is socially valid and fair since helicopter money means not only offering free money to companies and workers but also ensures more democracy from below.

Perhaps a less clearly highlighted aspect of this crisis is that it causes the degeneration of democracy. Italy’s economic policy is now run by  the EU technocracy, which operates according to criteria dictated by neoliberal ideologies and the lobby of the speculators in Big Finance.

Representative parliamentary democracy is increasingly stifled by EU policies dictated by the Germany’s  Merkel-Gabriel CDU-SPD government. Now is the time that in every nation citizens demand the ability to recover a bit of monetary sovereignty, not against the idea of a united Europe but against this EU. Otherwise it will be the forces of the most chauvinistic  right prevail.



[1] http://www.monetafiscale.it

[2] See yanisvaroufakis.eu/, Bitcoin: A flawed currency blueprint with a potentially useful application for the Eurozone

[3] See Enrico Grazzini, Micromegaonline, La moratoria del debito italiano è un’illusione. Meglio emettere una nuova moneta statale, 27 gennaio 2015

[4] Rob Parenteau, http: //neweconomicperspectives.org/, How to exit austerity without exiting the euro

[5] The Levy Economics Institute is a nonprofit research institute in New York on whose board also sits the Nobel laureate Joseph Stiglitz

[6] Marco Bertorello, Micromegaonline, Il laboratorio greco e il diritto all’insolvenza, 8 febbraio 2015

[7] Paolo Pini e Roberto Romano, Micromegaonline, Dalla Grecia all’Europa, un New Deal per uscire dalla crisi,

[8] Idem, “We believe that our utopian perspective is the only one that can counteract the not only economic but civil implosion of Europe. This requires that the forces of the left work for a new European governance, which then intends to reform the euro ”

(February 10, 2015)

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope


3 thoughts on “A new ‘fiscal’ currency to tackle the Eurocrisis, from Greece to Italy

  1. Interesting proposal. There are two misconception I would like to point out concerning the euro and concerning so-called “deflationary” currencies such as bitcoins.

    First, the euro is *not* “deflationary”. The euro is indeed “inflationary” however it’s expansion, i.e. quantity of the euro money supply is controlled by the ECB and not by member countries. To the member countries it may look like a “deflationary” currencies since they can’t control it’s supply.

    Second, bitcoin certainly is a “deflationary” currencies however whose supply is finite (although it’s subdivision is quite large in that it can be divided into 1/100,000,000 of a bitcoin). Though the misconception is that a “deflationary” currency like bitcoin benefits the public holding and spending it. The common misconception is that it punishes debtors. That is clearly false. Loans taken out on bitcoin and other “deflationary” currencies can be stipulated to be paid back on an agreed upon index based on it’s value, i.e. indexed to it’s purchasing power.

    Posted by konst | February 19, 2015, 5:18 pm
    • I wanted to clarify and possibly correct a typo. When I wrote “Though the misconception is that a “deflationary” currency like bitcoin benefits the public holding and spending it” what I meant to say is “A deflationary currency like bitcoin does indeed benefit the public holding and spending it”.

      Posted by konst | February 19, 2015, 5:43 pm


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