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By Silvia Marchetti
     ROME(MNI) - The president of the budget committee of the lower house of
Italy's congress told MNI that the European Central Bank should either directly
finance eurozone public investment projects or buy bonds issued by the European
Investment Bank to fund infrastructure and industry.
     Claudio Borghi, also an economic advisor to the far-right League party, in
coalition with the populist 5-Star Movement, said the Italian government was
rallying support for its proposal among populist parties elsewhere in the
continent ahead of May's European parliamentary elections.
     "It would be the best way to make sure the transmission of EU resources and
investments are actually implemented in a centralised, orderly way, without
weighing on national budgets," he said, explaining that ECB investment spending
could function like quantitative easing, and that one option would be for it to
buy EIB bonds in the secondary market.
     "There's no need to amend the ECB's statute: it is pretty flexible and can
be interpreted and adapted to many uses. There were doubts at the beginning
whether QE itself was legitimate and not in breach of existing treaties, but
then it was given the green light and implemented."
     Italy is also lobbying for investment spending to be excluded from EU
fiscal rules.
     The central bank already buys EIB bonds, such as 'green bonds' to finance
eco-friendly investment projects, through national central banks as part of its
policy of reinvesting its stock of bonds built up during quantitative easing.
While direct funding of investment projects would be permissible via the
purchase of publicly-traded bonds, such as those issued by state development
banks, officials consider that it might be hard to argue that spending of this
sort should not count towards national debt. The ECB's mandate would also
require that funding for investment be justified in terms of monetary policy's
price stability objectives.
     A source linked to the 5-Stars Movement told MNI that the time had come for
the ECB to adopt "efficient" policies to support growth and new jobs in a
stronger, more direct way.
     "We're debating with other European partners whether the ECB's monetary
policy transmission has really been successful and we've reached a conclusion:
it has not. The central bank is not doing enough to boost productivity and
employment across the eurozone."
--MNI London Bureau; +44 203 865 3829; email:
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