Robert HARNEIS -TDO- (FRANCE) - The Eurosceptic Italian government have got their eye on the nation’s gold reserves. They are the fifth largest in the world despite Italy’s lame government finances. This is causing mounting nervousness from Euro supporters both in and out of Italy.

First of all, on 25 FebruaryEconomy Minister Giovanni Tria said that nobody could use Italy’s gold reserves other than the European Central Bank, for financial operations.

Claudio Borghi, the anti-Euroeconomics spokesman of the ruling League party, has tabled a bill intended to establish that the gold is the property of the state, rather than of the Bank of Italy where the metal is held, a point which is disputed in Italy.

Borghi denied that this signaled the government wanted to sell some of the gold, to help resolve its public finance difficulties, as has been claimed.

But Tria, who is not a member of either the League or its coalition partner the 5-Star Movement, distanced himself from the proposed bill.

“Nobody can use the gold reserves except the ECB, for its monetary policy maneuvers,” he told Rete4 television station.

“No state can exert influence or give instructions because the Bank of Italy is independent, and neither can the Bank of Italy give gold to the Italian government, because that would be state aid,” and therefore against EU rules, Tria added. Not an argument likely to carry much weight with the present government of Italy.

Then on 4March Bank of Italy’s Governor Ignazio Visco insisted the country’s reserves of gold belonged to the central bank and could not be used to fund government spending.“Bank of Italy’s gold reserves amount to between 80 and 90 billion euros ... less than 10 percent of its total assets,” he said during a panel discussion.“Like the rest of its assets, it cannot be used for monetary financing by the Treasury. These things are not hard to understand,” he added.

Maybe they are not but clearly Salvini and Di Maio the effective joint leaders of the Italian government are not likely to be easily discouraged from getting the reserves under direct government control rather than leaving them in the grip of known Europhiles.

As the Italian government didn’t seem to be getting the message, Mario Draghi, the Italian head of the European Central Bank, pointedly told two Italian MEPS that the European Central Bank needs to approve any operation in the foreign reserves of euro zone countries, including gold and large foreign currency holdings.

“The ECB shall approve both the operations in foreign reserve assets remaining with the NCBs (national central banks) ...and Member States’ transactions with their foreign exchange working balances above a certain threshold,” Draghi said.

“The purpose of this competence is to ensure consistency with the exchange rate and monetary policy of the Union.”

Undeterred two bills are now under consideration in the Italian parliamentOne law would instruct the central bank’s owners, most of them private banks, to sell their shares to the Italian Treasury at prices from the 1930s.

The other law would declare the Italian people to be the owners of the Bank of Italy’s reserve of 2451.8 metric tons of gold, worth around $102 billion at current prices.

Complaining that hundreds of thousands of small individual investors lost billions of dollars after several Italian banks failed in recent years, the anti-establishment '5 Star Movement' and the nationalist 'League', depict the central bank as a symbol of a technocratic elite aloof from the needs of ordinary Italians. 

“We need a change of course at the Bank of Italy if we think about what happened in the last years,” said Deputy Prime Minister Luigi Di Maio, leader of the 5 Star Movement.

Five Star and the League have repeatedly attacked the Bank of Italy for not preventing the banking crises, and blamed it for the losses suffered by ordinary savers who had bought bank shares and bonds.

“If you are here with your current account in the red, it’s because the people who were supposed to control things didn’t do so,” League’s leader, Interior Minister Matteo Salvini, told a group of former investors in Banca Popolare di Vicenza, which was liquidated in 2017.

Meanwhile from outside the government, “The gold belongs to the Italians, not to the bankers,” said Giorgia Meloni, leader of the Brothers of Italy, a far-right opposition party that supports both bills. “We are ready to battle everywhere in Italy and to bring Italians to the streets if necessary.”

The establishment sees it differently, warning that the bills are an attempt to undermine the Bank of Italy’s independence, and to spend the nation’s gold reserves on populist policies.

The 5 Star Movement and the League support public ownership of the gold reserves, and with backing from parties comprising 60% of lawmakers, the draft law has enough support to pass.Lawmakers from 5 Star also support nationalizing the central bank, while the League hasn’t decided yet, leaving the bill short of a majority with around 40% support.

As of last week they had set up a parliamentary commission to look into the failure of Italian banks, launching what could be months of tense scrutiny in the run up to the European elections on 23 May.

Whilst the pro EU establishment claim to see the moves as a possible way for a populist government to spend more, it is more likely that it is a preemptive move to make sure that if, or rather when, there is an Italian currency crisis, it is the Italian government that has control of the gold not the European bankers. This could be vital if Italy decided to leave the Euro.

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