Monetary Inspiration from Naples for the ECB


The European Central Bank’s Governing Councilheld its October meeting in Naples, making it worthwhile to consider the city’s unusual contributions to monetary policy in the past.

The European Central Bank’s Governing Councilheld its October meeting in Naples, making it worthwhile to consider the city’s unusual contributions to monetary policy in the past.

European Central Bank (ECB) President Mario Draghi arrives to attend a news conference at the end of the ECB Governing Council meeting in Naples October 2, 2014. REUTERS/Remo Casilli

ECB President Mario Draghi has strongly hinted that he is about to unleash unconventional policies, perhaps even a variant of the quantitative easing the Federal Reserve used to buy up Treasury bonds in the United States.

One problem for the ECB has been that its efforts to pump money into the banking and financial system have so far hinged on taking securitized bonds – linked to underlying assets and cash flows – but that it is precisely this form of finance that is relatively undeveloped in Europe’s stressed-out southern regions, including Italy, where short-term bank loans have long been the norm.

As visiting journalists hastened to report, Naples is a city where organized crime appears rampant, the underground economy is large, locals line up to witness recurring church miracles, and where today the mix of unemployment and deflation is worse than Greece.

It was also home to Lorenzo de Tonti, a banker who plied his trade around Europe in the late 17th century and had much to do with the development of public finance at a time when centralized states were consolidating.

His invention – although some say he really expanded on a historical practice in highly-feudal Naples – was the tontine, basically a form of annuity for investors, but also of funding for governments. Fittingly, it has a lottery-type component, not unlike today’s social security schemes, since contributions are mandatory but nobody knows exactly how long they will live.

Tontines were issued by governments and sold to subscribers who in exchange would receive interest payments for life. Subscribers were usually wealthy extended families who would choose their youngest trusted member to be the recipient. When that person passed away, so did the tontine.

Questo contenuto è riservato agli abbonati

Abbonati per un anno a tutti i contenuti del sito e all'edizione cartacea + digitale della rivista di geopolitica

Abbonati ora €45

Abbonati per un anno alla versione digitale della rivista di geopolitica

Abbonati ora €20

- Advertisement -spot_img

La variante sudafricana non esiste!

La Pop Art e la critica del sistema

Prezzi dell’energia: una politica per soluzioni durature

Usa, il Pentagono indaga sugli UFO

Autodistruzione imperiale