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A Bundesbank economist has a radical plan to halve Italy's debt

Section: Daily Dispatches

By Alessandro Speciale
Bloomberg News
Saturday, October 27, 2018

Italy's populist government doesn't need to ask for money from European partners to halve its debt -- it could tap the large private wealth of its citizens, Bundesbank economist Karsten Wendorff suggested.

The radical proposal echoes the debate in Italian media over a potential "wealth tax." Unlike a tax, however, it wouldn't directly eat into the patrimony of the country's families, according to its proponent, who heads the German central bank's public finance department.

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"Instead of a European fund that buys Italian government bonds and that is ultimately backed by European taxpayers, a national fund should be created," Wendorff wrote in the Frankfurter Allgemeine Zeitung on Saturday. "This fund would buy Italian government bonds."

Such a fund would be financed by "national solidarity bonds" that Italian households would be obliged to purchase -- for example, to the tune of 20 percent of their net wealth. At such a rate "almost half of Italian government debt could be converted into solidarity bonds." ...

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