June 8, 2019 / 7:34 AM / 19 days ago

Italy's minibonds would either be illegal or useless - finmin

FUKUOKA, Japan, June 8 (Reuters) - It would be either illegal or useless for Italy to issue bonds to pay its suppliers as these notes would break European currency rules or add to the country’s massive government debt, the Italian finance minister said on Saturday.

Giuseppe Tria was seeking to shoot down the notion, floated by the ruling League party and backed by the whole Parliament through a non-binding motion, that the Italian state could pay its sizeable arrears with suppliers via small-denomination bearer bonds.

He said these so called mini-BOTs would either constitute new public debt, which would make Italy’s public finances look even worse, or introduce a parallel currency, which is forbidden by European Union treaties regulating the euro.

“The economy ministry has already given a negative opinion,” Tria told Reuters and Italian news agency Ansa in an interview on the sidelines of a G20 meeting in Fukuoka, Japan.

“In one interpretation, the debt one, they are useless. In the other, they breach treaties and can’t be done,” he added.

Tria was echoing remarks made by the European Central Bank’s President Mario Draghi on Thursday while cabinet undersecretary Giancarlo Giorgetti of the League party said on Friday mini-BOTS were “one of the possibilities” to help Italy clear its debt with suppliers. (Reporting by Francesco Canepa; Editing by Chris Gallagher)

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