Italy\’s Parallel Currency

There have been some amazing Italian inventions over the centuries. The newspaper. The pistol. The radio. The stock exchange. The motorway. And who could overlook those staples of modern life, jeans (originally from the French word for Genoa: genes) or the pizzeria.

Few other countries have contributed quite as much to creating the world we live in.

Right now, Italy could be on the brink of another major innovation. A parallel currency to run alongside the euro. It already had the backing of the former Prime Minister Silvio Berlusconi, and the parties supporting it are steadily gaining ground in the polls.

Could it work? The mainstream economic establishment will no doubt heap scorn on the idea. And yet, in reality, a parallel currency could provide an elegant exit from the euro, maintaining some of the advantages of the single currency, while freeing the country from endless recession. If it ever gets off the ground, Italy could quickly become one of the most attractive economies in the world.

It is hard to find any words to describe Italy’s experiment with merging its currency with Germany, France and the rest of the eurozone other than “dismal failure.” Since it adopted the euro, Italy’s average annual growth rate has been zero, according to calculations by the Bruegel Institute. You read that correctly. Absolutely nothing, over almost two decades…

…Italy’s unemployment rate is a crippling 11%, the highest of Europe’s three biggest economies, and youth unemployment is a scary 35%. The national debt has climbed to a giddy 133% of gross domestic product, not because the government is especially extravagant, but because that’s what happens in a zero-growth economy.

Italy's Parallel Currency

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