The Telegraph, London
Thursday, May 2, 2013
The World Gold Council
has advised Italy to deploy its 2,000 tonnes of
gold to break free of European Monetary Union austerity dictates.
By using the reserves --
the world's fourth largest -- to collateralise the
first chunk of any losses for bondholders, Italy could raise E400 billion or
so on the capital markets and determine its own future for a while.
Italy did this in 1974
when it borrowed $2 billion from the Bundesbank,
using gold as collateral.
Portugal did the same
thing to borrow $1 billion from the Bank for International Settlements in the
1975-1977, and India used its gold to borrow from Japan in 1991.
A joint WGC-Ipsos survey found that 61 percent of
Italian business leaders and 52 percent of the public would support the idea,
with only a small minority opposed.
The report said:
"With Italy still
facing significant financial challenges, national assets -- such as gold
reserves -- present an opportunity to buy some vital breathing space.
sovereign debt, or 'gold-backed bonds,' is issued debt that is underpinned by
gold collateral. By using a portion of their gold reserves in this way,
sovereign states could borrow more cheaply, without selling an ounce.
"This use of gold
would help sovereign governments to regain the confidence of the bond markets
and lower funding costs. Nations could raise between
four and five times the value of their gold reserves -- a bond 20 percent collateralised by gold could raise around 80 percent of
Italy's two-year refinancing needs.
"This would buy time
for growth to take hold. It would lower sovereign debt yields without
increasing inflation and would give Italy time and resources to work on
economic reform and recovery. Using gold for the purposes of sovereign debt
issuance would allow greater flexibility beyond austerity."
This is exactly the sort
of thinking that is needed in the occupied EMU states, and Italy has been
under occupation since the ECB effectively toppled the elected the government
in the coup d'etat of November 2011 -- with the
active collusion of President Napolitano, a former Stalinist who later
transferred his ideological mania to the EU Project.
Such a plan has been
proposed by Alessandro di Carpegna Brivio at Camperio Sim.
However, it would require
the new premier, Enrico Letta, to tell Europe to jump in the lake, since
"reflation in one country" would violate the EMU club rules.
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