SIRE and the Danger of Invisible Public Debt in Italy
In recent years, the debate on sovereign money and the use of innovative financial instruments has taken hold in many nations, including Italy. One of the most controversial concepts is SIRE, an idea of parallel money that promises to boost the economy and restore monetary autonomy.
However, many wonder whether this is really a revolutionary solution or just a way to mask new public debt. In this article we will analyze in detail the concept of SIRE, its economic implications and possible advantages and disadvantages.
The SIRE (Incentive System for Economic Recovery) is an alternative monetary instrument that aims to create a currency parallel to the euro, spendable only within the national territory. The idea is to issue tax credit certificates (CCF) that can be used by citizens and businesses to pay taxes and contributions, promoting the circulation of liquidity without affecting the state budget in terms of public deficit.
The issuance of SIRE occurs through a government decision, usually linked to economic stimulus programs or fiscal support. The State issues tax credit certificates that are assigned to citizens, businesses or public entities with the aim of increasing purchasing power and encouraging internal investments. Distribution can occur through tax bonuses, tax relief or other forms of incentives. Each certificate has a predefined nominal value and a maturity, at the end of which it can be used to reduce the tax burden or be transferred to third parties.
It is an alternative monetary instrument that aims to create a currency parallel to the euro, promoting the circulation of liquidity without affecting the state budget in terms of public debt and without providing interest to holders. This aspect distinguishes it from other public debt instruments, such as government bonds, which instead guarantee a return. Certificates are therefore purely a payment instrument and do not represent a financial investment opportunity.
The certificates are not directly convertible into cash or transferable to current accounts, but they can theoretically be sold to third parties through financial intermediaries. However, the real financial impact comes from their nature as a countervailable tax credit: each certificate used to pay less taxes reduces the State’s tax revenue, creating a revenue gap that, in the long run, translates into a need for additional financial coverage. In other words, although the SIRE does not appear to be a direct public debt, the lost revenue translates into a further request for money to offset the budget.
#2. Who is in favor and who is against
The SIRE project divides the political and economic landscape. On the one hand, supporters see this instrument as a way to boost the national economy without compromising the budget balance. Among the main promoters are economists of Keynesian orientation and sovereignist movements, who see in SIRE an opportunity to regain part of the monetary sovereignty lost with the introduction of the euro. They argue that, in a context of fiscal rigidity and unified monetary policy, SIRE can offer a breath of fresh air to the domestic economy, incentivizing spending and investments.
On the other hand, however, there is strong opposition from liberal economists and European institutions, who see in SIRE a poorly disguised attempt to introduce a dual currency, threatening the stability of the eurozone. The criticism focuses above all on the risk of inflation, which could explode if the issuance of these certificates were excessive.
Furthermore, there are fears that a strong sale of credits on the secondary market could generate the same effect as the BTP-Bund “spread”, thus decreasing confidence in these instruments. Other critics point out how, in such circumstances, confidence in SIRE could quickly disappear in the event of massive use or an economic crisis, leading to a devaluation of the certificates and putting the credibility of the State to the test. This eventuality could undermine the entire economic system and cause a collapse of confidence in national institutions.
#3. Final considerations
SIRE has some indisputable advantages, especially if used in moderation and in a context of economic stability. The main advantage is the ability to stimulate domestic demand without a direct impact on public debt, at least in the initial stages. Using certificates to pay taxes and contributions lightens the tax burden perceived by families and businesses, increasing purchasing power.
However, one of the major risks of SIRE is linked to its nature as a tax credit that can be offset. Each certificate used to reduce taxes translates into a loss of revenue for the State, which will still have to find liquidity to maintain the budget. This creates an indirect public debt that, although not immediately visible, materializes in the medium-long term as a significant financial pressure.
In conclusion, SIRE appears to be an ambitious but intrinsically risky solution. While on the one hand it promises to restore economic sovereignty, on the other it hides the danger of turning into additional public debt disguised as innovation.
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