Earlier this week, Italian Deputy Prime Minister and Interior Minister Matteo Salvini called for wrestling control of Italy’s gold reserves away from the country’s central bank.
Pier Carlo Padoan, a former Italian economy minister, has warned of the grave consequences of the government’s plans to use Italy’s gold reserves to tackle its budget deficit and avoid a VAT increase.
“If the idea becomes acceptable that public finance problems can be resolved by emptying the treasure chests, the message to the markets would be devastating,” he said.
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Padoan accused the government of fiscal irresponsibility, describing Italy’s gold assets as something that “should be untouchable”.
“It doesn’t matter that Italy has the fourth-largest gold reserves in the world; we also have the third largest public debt,” he said, warning that Italy may be plunged into a similar situation as countries which have defaulted on their debt, such as Argentina.
“What image does a country offer if, to sustain its current spending, it does something like this?” Padoan pointed out, referring to the government’s push to use gold reserves to finance spending plans.
Salvini’s ‘Anti-Elite Populism’
Roland Benedikter, research professor of multidisciplinary political analysis at the Willy Brandt Centre of the University of Wroclaw-Breslau and co-director of the Centre of Advanced Studies of EURAC Research in Bozen-Bolzano, told Sputnik that the issue is all about “who is formally regarded as the owner of Italy’s gold reserves: the Bank of Italy or the Italian State”.
“Like other provocative rhetoric of Salvini, his statement is meant as anti-elite populism. It serves two proposes: towards the inside, i.e. as tool in the domestic political discussion, and towards the outside, i.e. as a critique of the European Union. Both are closely intertwined,” Benedikter claimed.
He argued that Salvini’s rhetoric is not about selling Italy’s gold reserves to finance the nation’s debt, but “rather about replacing Italy’s existing elites which is part of the current government’s aspirations”.
Benediker suggested that Italy’s gold reserves are needed “as a balancing tool to stabilise the confidence of investors and money-lenders”.
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“As we hear from Salvini’s economy and financial advisers, his entourage seems to be well aware of this and does not plan to sell Italy’s gold. Besides the fact that the market is currently swamped by other actors such as — but not only — Venezuela. And that we are living through a moment where everybody who is not in direst straits is buying gold, not selling it,” he concluded.
His comments came a day after Italian Deputy Prime Minister and Interior Minister Matteo Salvini called for taking control of Italy’s gold reserves away from the country’s central bank, claiming that “the gold is the property of the Italian people, not of anyone else”.
Earlier, he insisted that the management of the Bank of Italy should be “completely cleared out” because they failed to avert the country’s banking crisis.
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The remarks followed a report in the La Stampa newspaper claiming that the Italian coalition government, formed by Salvini’s anti-migration Lega Party and the anti-establishment Five Star Movement (5SM), is seeking to sell Bank of Italy reserves to fund additional government spending and avoid a planned VAT increase in 2020.
The Bank of Italy, the country’s central bank, which is part of the European System of Central Banks, remains the world’s fourth-largest holder of gold reserves, with €90.8 billion ($102.7 billion) worth of the precious metal.