From being ironical, ‘local currency’ is now of the essence

FT Alphaville (which is generally free) has an article on an Italian bank that has gone bust entitled ‘The curious case of Banca Carige’.

It certainly is – the European Central Bank (ECB) is acting as a receiver!

It states:

The ECB assumed new powers in 2014, through the implementation of the Single Supervisory Mechanism (SSM), which “supervises” significant banks in the eurozone. Previously, this was the domain of national central banks.

This is, as Alice in Wonderland would have it, curioser and curioser.

Whilst it has chosen not to use it in Greece, is this now the ECB’s secret weapon – any Eurozone bank in difficulty will have the ECB appointed as the receiver? Will that include DeutscheBank when – as seems likely – it eventually wobbles?

To have European Banking in the hands of the receivers looks rather like a cunning plan…

I’m not a Euro fan but for the sake of stability let’s hope it works.

And for independence sake the Italians (and indeed other Euro members) really ought to be looking closely at a plan for issuing some sort of local currency such as this.



  1. Sean Danaher -

    Had the Irish Government not had to bail out the banks after the banking crisis, it would have made an extraordinary difference and saved a lost decade.

    1. Peter May -

      Remarkable in many ways why they still remain so pro EU.
      I wonder are there any polls on what the Irish think of the Euro?

      1. Sean Danaher -

        The EU have been very supportive of Ireland through the Brexit process which helps. The Irish blame the banks first, the FF Gov second and the EU third for the Banking Crisis.

        The National Debt is still very high and in per capita only 2nd to Japan. It is on a downward trajectory however and is likely to be overtaken this year by the US, Italy and Belgium.

        Regarding Euro polls I would need to check, but I suspect support is still quite high. From the MMT perspective this might be surprising, but the country is so obviously doing better than the UK. The structure of the Irish economy is very different to the UK, with exports being vastly more important and I’m not at all sure MMT is fully thought out in terms of exports.

        Good comparators would be Denmark and New Zealand, but Sweden would also be interesting to look at.

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