Sunday, April 1, 2018

Italy Abandons the Euro. First Country to Go Fully on Virtual Currency

Mr. Matteo Salvini (left) and Mr. Luigi Di Maio (right) leaders, respectively, of the Italian Northern League and of the 5-star movement. The two Italian political groups which gained the most votes in the recent elections have recently formed a coalition government which is enacting sweeping reforms of the Italian financial system. 

The recently formed Italian coalition government, an alliance of the Northern League and the 5-Star Movement, enacted a sweeping series of measures sure to raise the attention of the world. 

First and foremost, the Italian government declared Italy to be officially out of the Eurozone. With immediate validity, the Euro ceases to be an accepted currency in Italy. Private citizens and businesses using it or accepting it are liable of criminal charges. 

Secondly, the government created a new, fully virtual, currency. This new currency does not exist in the form of cash, but only as virtual accounts. This aspect makes it similar to the well known "bitcoin" but, unlike the bitcoin, it can be issued by the government only.

The new currency is termed "E-coin," where the "E" stands for espresso. From now on, the government will pay its debt, as well as the salaries of government employees, and all its expenses in the form of espresso coins. Each e-coin is fully redeemable in an espresso coffee issued by any of the government authorized exchange points, formerly called "bars", now renamed "E-banks" (espresso banks). Coffee brewing by private citizens (cryptocoffee) has been declared illegal. The government has intimated citizens to surrender all their coffee-making equipment, including the well known "Neapolitan Flip" model.

Overnight, the bank accounts of all private citizens, companies, and institutions in Italy have been turned from the Euro denomination to the E-coin denomination, at a 1:1 exchange ratio. Some concern is recorded among citizens since by law the new e-coins can only be redeemed if the espresso coffee is immediately consumed on the spot. This is believed to pose some problems in case of large E-coin sums, especially for people suffering from tachycardia or other hearth problems. 

The government has reacted to this concern by a second form of virtual currency which is going to be launched in the coming days under the name of "P-coin" (pizza coin), an idea that seems to have been derived from some earlier experimentation. One P-coin is fully redeemable in a pizza margherita or napolitana, to be consumed on the spot. By government decree, all restaurants in Italy are by now termed "P-banks" (pizza banks).

The Italian government has also declared to be working on a third type of coin, termed the "F-coin". It has not been specified what the "F" stands for and what kind of goods or services this new coin will be redeemable in. Government spokespersons did not confirm some ongoing speculations.

At the international level, the move of the new Italian government has raised much interest and some concern. In terms of positive reactions, the president of the United States, Donald Trump, has praised the Italian initiative and declared that he is personally interested in the "F-coin."  Mr Trump has also declared that his government is working on the concept of a "P-coin," where "P" does not stand for "pizza." 

On the contrary, some European leaders have expressed concern that the diffusion od coffee or pizza based currencies may lead to a "Mediterraneanization" of Europe. Ms. Angela Merkel, prime minister of Germany, has declared that her government is working on the concept of "B-coin", redemable in a pint of beer, whereas the French government is reported to work on the "Fr-Coin", redeemable in a frog, raw or fried. Ms. Theresa May, leader of the UK government, has also declared that the country may move on a F-coin, although the term is reported to be temporarily standing for "foo" while a suitably redeemable Brexit-compatible food or beverage is being actively searched for.



Ugo Bardi is a member of the Club of Rome, faculty member of the University of Florence, and the author of "Extracted" (Chelsea Green 2014), "The Seneca Effect" (Springer 2017), and Before the Collapse (Springer 2019)