Italian Lira Makes a Comeback Due to Organized Crime

While the Italian government considers issuing a second form of paper money for the nation, to co-circulate alongside the euro notes, an age-old Italian institution, organized crime, is looking in another direction — backward.

Bloomberg reported on June 15 that another parallel currency, the old Italian lira, is once again circulating in Italy, at least among its domestic criminal enterprises. The business news service says that the police find that even though the lira stopped being legal tender in February 2002, it is still being used for illegal transactions. This is even though they are no longer redeemable, even at the Bank of Italy.

A representative of the national financial police is quoted as saying at a parliamentary hearing, “We still discover big amounts of liras,” and that they “still constitute parts of illicit transactions.’’ He added, “When a banknote is accepted by an organization internally, even if it is outside the law as a legal value, it can settle transactions. We are obviously talking about illicit organizations.’’

Running away from the euro may be becoming an Italian preoccupation. As reported in the July 8 issue of Coin World, a proposal before Parliament calls for the establishment of a currency, for domestic use only, called mini bills of treasury, or minibots. The proposal would allow the government to use them for the arrears it owes to commercial businesses and to pay social benefits, and citizens could pay their taxes with them. Private businesses would have the option to accept them.

Thanks to Arthur Friedberg.