Italy Raises Billions in More Debt

Author: Adam Hopkin - Numismatic Editor

Published: 26 May 2020

Last Updated: 2 Feb 2023


In an attempt to subdue the incredible strain coronavirus has had on the Italian economy, the nation’s treasury has reportedly raised €22.3bn through its BTP Bond. The move saw institutional investors cough up €8.3bn, with investors from the retail sector following suit and obtaining €14bn worth of bonds within the three-day purchase window.

Italian Gold

More Debt, More Borrowing

With strict lock-down measures leaving the economic infrastructure of the county devastated, the Bank of Italy released a solemn “worst case” prediction expecting debt to soar whilst output shrinks by up to 13%. Introduced on the back of the crippling eurozone recession of 2012, the BTP bond widens the sources of possible funding for the Italian government, attracting potential investors with an often-superior coupon to bonds seen elsewhere, currently residing at 1.4%. Initiatives such as this have been an essential financial lifeline for those that have now found themselves without a reliable source of income, as the extensive lock-down has closed businesses and left thousands unemployed.

Italians Flock to Gold

A national chain of bullion dealerships states that it has experienced a 50% increase in private purchases of gold throughout 2020, with the last comparable surge being in the 2012 economic depression that saw the establishment of thousands of gold stores across Italy to meet the demand. These stores are not only seeing opportunistic hoarders cash in on their bullion reserves, as  trinkets, collectors' items and valuable heirlooms are also being sold or used as collateral against loans.

With the price of gold having risen by over 25% since the start of the year, recent months have seen interest in the precious metal escalate, with many Italian bullion dealers now seeing 50% more trade compared to the same period in 2019. Gold is currently priced at €1,570.60 (£1,397.52) per troy ounce, which is a 0.89% decrease over the last seven days.

2020 Gold Price in Euros

Meanwhile, interest in the precious metal market within the UK has boomed suggesting widespread apprehension about the government's response to the virus. Chances of a speedy economic recovery were already looking slim as the UK is still to hammer out a trade deal with the EU, adding more uncertainty to an already fragile economic situation.

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