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The Italian populist government – a crisis still waiting to happen

By Michael Knox - posted Thursday, 7 June 2018

While this operation is being carried out, one must:

1. Prepare a technical plan for an immediate return to a national currency to govern quantities, rates and foreign exchange, accompanied by a directive to settle domestic and international debt and credit positions;

2. Enter into international alliances with countries interested in protecting the political autonomy of Italy or opposing the influence of the block of countries that gravitates on Germany, which provides concrete commitments to act as a lender of last resort to deal with the speculation associated with the decision to abandon the Euro;


3. Create a Consultation Committee composed of the main bank, business, labour and economists with operational experience and international prestige to assist the Government in the transition;

4. Block any increase in taxation until the completion of the return to normal of the financial and real markets;

5. Undertake to constantly inform the public internal and international opinion of the choices made and their effects on development;

6. To replace the state leadership that has shown a strict dependence on European influence and poor respect for national sovereignty.


Esteemed Italian economist and banker, Paolo Savona, was nominated by the incoming populist government of Italy as their Finance Minister. The President of Italy resisted this nomination. Savona instead became the Italian Minister for European Affairs.


Savona drafted a plan to save the Italian economy while remaining in the Euro. This he called Plan A. Savona's sin was that he also drafted a possible plan to save the Italian economy while leaving the Euro. This he called Plan B.

It is our belief that Savona's plan A and B are an essential part of the program of the incoming populist Italian government. These issues will not go away. The detail of Savona's plans will emerge again as components of Italy's bargaining condition with the rest of the Euro Area over coming months.

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This article was first published by Morgans.


The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so. Those acting upon such information without advice do so entirely at their own risk.

This report was prepared as private communication to clients of Morgans and is not intended for public circulation, publication or for use by any third party. The contents of this report may not be reproduced in whole or in part without the prior written consent of Morgans. While this report is based on information from sources which Morgans believes are reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect Morgans judgement at this date and are subject to change. Morgans is under no obligation to provide revised assessments in the event of changed circumstances. This report does not constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment whatsoever.

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About the Author

Michael Knox is Chief Economist and Director of Strategy at Morgans.

Other articles by this Author

All articles by Michael Knox

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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