In the first quarter of 2022, the Ministry of Economy and Finance will issue a new short BTP and a new 5-year BTP. In the quarterly program it is specified that the new securities will expire on November 29, 2023 and April 1, 2027 respectively. maturity, and 9 billion for the short BTP and 10 billion for the five years. In addition, the January and December 2024 BTPs will be reopened, the August 2026 BTPs, all with zero coupons, the February 2029 BTPs with a 0.45% coupon and the June 2032 BTPs with a 0.95% coupon.
This week the Treasury has estimated net emissions of 80-90 billion euros for 2022 (113 billion in 2021). Via XX Settembre intends to have an important presence on the dollar curve, considers the green bond segment strategic, so much so that there will certainly be a new security (the maturity will be evaluated: lower or higher than the current 2045, probably lower), at least one BTP Futura.
As for the BTP Italy, next year there will be a small size expiring “so it is very possible that we will return to open this tool even if there is a management issue of real negative interests”, he explained, adding that “we are working on some adjustment mechanism “. The Treasury also spoke of negative net issuance for 6-12 month Bots, expected two new bonds on the 7-year line and a new 10-year. While on the extra-long stretch of the curve, new benchmarks will probably be introduced, in this case through syndication, on maturities of 15, 20 and 30 years.
This morning the yield differential between the ten-year Italian benchmark and the same German maturity rises to 137.56 basis points with the yield of the ten-year BTP increasing to 1.112%, on the maximum for about four weeks, thanks to the return of doubts on the debt Italian while the ECB reduces the stimulus and the growing uncertainty about the future of the government, with the signs of availability for the Quirinale from the premier, Mario Draghi. This year, the average cost of the stock of debt stood at around 2.4%, in line with the previous year, and is expected to decline next year. And the average life of the debt has lengthened again this year reaching approximately 7.12 years, net of EU funds, compared to 6.95 in 2020.
The ECB could raise interest rates at the end of next year and ask to conclude the bond purchase would strongly signal the arrival of the hike in the next two quarters, as board member Robert Holzmann said yesterday, fueling the fears of a hawkish turn of the Eurotower. And yesterday Prime Minister Mario Draghi spoke on the high debt, saying that the way out is sustainable, fair and strong growth, a “market barometer”.
Following the predictable rate hike, Italy could again be grappling with the specter of debt, which has risen to over 150% of GDP. The ECB’s purchases of 250 billion euros in Italian government bonds under the Pepp emergency program have put a limit on the increase in financing costs, but the conclusion of the Pepp has rekindled the fear that Italy has a problem chronic growth and could destabilize the entire bloc of EU countries.
“The opinions of investors, especially foreign ones, on Italy will depend on the ability to make good use of the more than 200 billion euros of the NextGenEU program, made available to our country as long as Rome continues to comply with the conditions set by Brussels”, he said. underlined Antonio Tognoli of Integrae Sim according to which among the problems of Italy that have held back its growth in the last 20 years, the low employment rate, stagnant productivity, lack of investment in education and technology, a suffocating bureaucracy and the gap between North and South. “How we plan to repay our debts
With growth, of course, but it may not be enough”, observed Tognoli.
There have been several proposals over time to reduce this ball to foot. “One in particular, I think it is topical and was formulated by Paolo Savona and Michele Fratianni”, recalled Tognoli, explaining that the project is partly linked to the so-called Chicago Plan, developed in North America at the beginning of the great crisis by economists such as H. Simons (1933) and I. Fisher (1935). The proposal, in addition to the debt / GDP ratio, also aimed to solve two other serious problems: that of the defense of private savings (which the Constitution says must be protected by the state) and that of the banks that guard savings, but which they cannot fully guarantee it.
According to the Fratianni and Savona project, savers in search of the maximum guarantee and protection of their money, would move their deposits on a voluntary basis (in particular those used as a means of payment formally guaranteed by the Interbank Deposit Protection Fund, i.e. those up to to a maximum of 100 thousand euros) at a new state institution, the Bank-Money. The latter would keep the deposits in a completely safe way thanks to their full coverage and their inclusion in the blockchain telematic chain that can be activated by the holders to make payments with a click of the mobile phone or with the computer mouse.
The money bank finances purchases of government bonds with guaranteed deposits. The money bank becomes a fixed buyer of public debt. Over time, the stock of debt held by the money bank grows by virtue of the fact that the demand for money is sensitive to income. The public debt becomes less heavy for the economy because the stock of debt held by the bank-money is not sensitive to the interest rate, due to the characteristic of a fixed customer. In summary and in accounting terms, the debt does not decrease but the proposal has as a collateral benefit an important reduction in the “interest-rate sensitive” component of the public debt.
What would ultimately be the result of this operation
According to the estimates of Fratianni and Savona, continued Tognoli, if the entire mass of collateral deposits moved to the bank-money – a process that is very likely because savings would be so perfectly protected and deposits cheaper – the share of public debt negotiated on the financial market, and therefore subject to the uncertainties and speculations characteristic of this market, would be reduced by approximately 800/1000 billion, thus reducing at the same time the relationship with the GDP. “This project takes advantage of the fact that the country’s wealth is about six times the GDP and that the means of payment are an integral part of it. Therefore, it is possible to guarantee the debt thanks to the considerable amount of bank deposits. But not only: according to the proponents,
