Questo blog è dedicato non solo, ma principalmente, al progetto Moneta Fiscale / Certificati di Credito Fiscale (MF / CCF), finalizzato a risolvere la crisi dell'Eurozona.
La descrizione più aggiornata del progetto è reperibile in questo post.
martedì 9 giugno 2015
Saving Greece from Europe
by Biagio Bossone and Marco Cattaneo
Another week of meetings has gone by, but no solution is in sight for
the Greek crisis. Creditors’ willingness to refinance the Greek debt is subject
to Greece’s acceptance of new austerity measures (amongst which, pension cuts
and additional tax hikes). Yet this would further worsen the depression that
has plagued the economy for the last six years, and would make it impossible
for the country to honor its future debt obligations.
The deadlock is about principles. The EU refuses to admit that its
policies to fight the crisis have been unsuccessful and unsustainable, and reasonable
proposals – even as moderate as those from Syriza – have thus continued to fall
on deaf ears.
As a result, very soon, short of cash, the Greek government might
default on its debt. To prevent this from happening, Athens could be bound to
resort to the introduction of some kind of new domestic currency, likely in the
form of IOUs (promissory notes to be reimbursed at some future dates), which
would circulate in parallel to the euro. The IOUs would be used by the
government to pay salaries and pensions to public employees, thus freeing up
the euros needed to service the external debt. European institutions and
leaders have not denied this possibility.
We fear that the IOUs would do nothing to prevent Greece from defaulting
chaotically and to help its economy out of depression. If Greece started using
IOUs as substitute for euros, this would likely be perceived as a signal that
Greece is unable to stay within the Eurosystem. Bank deposit runs would
accelerate, and the exit of Greece from the euro would follow suit. In any
case, the commitment to reimburse the IOUs in euro would have no credibility,
since Greece is already de facto insolvent.
In our view, the most sensible action that the Greek government could take
at this stage should be to introduce an instrument that would mobilize euros
for domestic private sector spending purposes, rather than replacing euros. The
difference is subtle and often escapes the attention of experts and
The Greek public sector, today, runs a net positive primary balance
position. This means that it receives more euros as it spends, net of interest
payments. If payments to creditors were to stop, Greece would have enough euros
to support its public expenditures: it would not need to introduce a monetary
instrument to replace short euros.
What Greece is actually missing is the resources to re-launch the
economy. To this end, it should issue a new type of non-debt bonds, which we have
recently proposed in books and posts under the name of Tax Credit Certificates
(TCCs). A tax credit certificate would entitle its bearer to a tax discount of
an equivalent amount maturing in, say, two years after issuance. Such future
entitlement could be liquidated in exchange for euros and be used for immediate
spending purposes. Liquidation of TCCs would take place against purchases of TCCs
by those who want to acquire the right to future tax discounts. For investors,
the TCCs would be a safe investment instrument paying an interest comparable to
a two-year zero-coupon bond. Besides, not being a debt instrument, TCCs would
be safer than conventional bonds: they would not imply a government commitment
to future repayments, and would therefore make it impossible for the issuing
government to default on them.
Through liquidation, TCCs allow future tax discounts to be transformed
into current spending. Under most conservative estimates, the output recovery
that would follow during the TCC deferral time (that is, until the certificate
matures) would generate enough fiscal revenues to compensate for the euro
shortfalls that the government would incur by receiving maturing TCCs for tax
The Greek government could issue, say, 7 billion euros equivalent of
TCCs (about 4% of national GDP), which it would assign to a variety of uses: allocations
to enterprises in relation to their labor cost (so as to immediately improve
their competitiveness), workers’ salary support, and social transfers to
needing households. Receivers of TCCs could exchange them for euros in the
financial market at discount on their nominal value. The discount would be
small, since total TCC issuances would not be large relative to total fiscal
revenues (7 billions would only represent about 10% of total gross revenues).
TCC assignments would supplement disposable incomes, thus adding new spending
power to income earners and stimulating demand; they would make Greek exports
competitive, and make investment in Greece attractive.
At the same time, Greece should suspend payments to international
creditors while it would announce a new financial plan whereby it would commit
to allocating, say, 2% of GDP to external debt payments (in euro) starting in 2016.
The commitment would be credible once taken in the context of a pro-growth
economic program driven by the TCC stimulus. Safeguard clauses could be
introduced in the new financial plan, which would be activated in the event of
fiscal under performance vis-à-vis the 2% reimbursement commitment. For
instance, the government could entitle taxpayers to receive additional TCCs
bearing longer maturities as compensation for additional euro tax payments, or TCC
holders could be incentivized to postpone the use of TCCs for tax discounts by
receiving an increase in their face value. Such safeguards would be much less
pro-cyclical than those that would be imposed by the EU to secure budget
targets in the event of fiscal under-performance.
A “euro + TCC” system would posses all technical requirements to make it
stable and sustainable. The unit of account and legal tender of Greece would
remain the euro. Yet Greece would gain the necessary means to jump-start the
economy. In addition, the prospects for creditors would improve enormously.
The political reaction of the Europe is obviously a different matter. The
EU and ECB might not appreciate an innovation like the TCCs. They might oppose
it and even take punitive action against Greece, such as cutting it off the Emergency
Liquidity Facility. Thus would force Greece into default and precipitate its exit
from the euro. But this is also what Europe doesn’t want: a similar reaction
would betray its ideological furor, and risk triggering the crumbling of the
We think this a very unlikely scenario. In any case, should it happen, the
responsibility of the resulting disorderly breakup would rest entirely on the
shoulders of the EU authorities.