Maroni: Italy Should Return To Lira
Roberto Maroni, Italy’s welfare minister, believes that his country would be better off if it went back to having its own currency. The idea has been called absurd by leaders of the European Union.
Italy used the lira as its currency until it became one of the 12 nations to start using euro notes and coins three years ago. Maroni believes that Italy should again adopt the lira as its currency.
The euro “has proved inadequate in the face of the economic slowdown, the loss of competitiveness and the job crisis,” said Maroni. Swiss Info reports:
Analysts said Maroni’s comments should be seen as populism typical of the Northern League. They do not represent the government as a whole and are not the harbinger of any dramatic political initiative.
The comments go beyond the usual anti-euro sentiment, which increasingly laces the rhetoric of Prime Minister Silvio Berlusconi and other ministers as Italy buckles under economic recession and a burgeoning budget deficit.
Maroni, a member of the Northern League party, says that Italy should hold a referendum to decide whether or not to go back to using the lira, even if only temporarily.
Analysts say that if Italy returned to the lira, Italy would have much higher interest rates and debt related costs, which would cause the country’s deficit to increase dramatically.
“Italy’s recession is worsening … we can expect more of this kind of declaration given the deterioration in the economy and the domestic political climate,” said analysts of SocGen.
The U.S. dollar has fallen against the euro as well as the yen as job growth in the United States has slowed more than expected according to a government report.
“It shows that there is a soft patch and maybe even a generalized slowdown,” said currency strategist Aziz McMahon. “Definitely the U.S. and European economies are slowing. Rates are going to peak soon. It’s a dollar-negative number.”
The dollar fell to $1.2307 versus the euro from $1.2265, but it remains up 2.3% against the euro this week. Against the yen, the dollar dropped to 107.62 from 108.29. The dollar is down 0.3% against the yen.