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Italian mafia using the old lira as its own parallel currency


ITALY'S proposed mini T-bills may be pie in the sky for now, but it appears the country already has another currency floating around - the old lira.

A senior police officer revealed last week that domestic criminal organisations are still using the pre-euro currency for illicit transactions. It is not clear how the former notes are ultimately exchanged for euros, if at all, though he said officers are still uncovering them. The lira ceased to be legal tender at the end of February 2002.

"We still discover big amounts of liras," Giuseppe Arbore, a deputy in the Guardia di Finanza, which investigates financial crimes, said at a parliamentary hearing on Thursday. "Italian liras still constitute parts of illicit transactions."

Mr Arbore's remarks prompted amazement among lawmakers of the Senate Finance Committee, where he was testifying on a government bill aimed at simplifying the tax system. When pressed to provide examples, he said he couldn't elaborate, citing ongoing investigations.

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"When a banknote is accepted by an organisation internally, even if it is outside the law as a legal value, it can settle transactions," he said. "We are obviously talking about illicit organisations."

The disclosure follows days of speculation and criticism of a proposal by members of Deputy Prime Minister Matteo Salvini's party for mini T-bills to pay state creditors, which some fear would be a first step towards a parallel currency, and even an exit from the euro.

Though it is little more than an idea and far from being introduced, if ever, it has come under fire from Finance Minister Giovanni Tria and fellow Italian Mario Draghi, the European Central Bank president. Both said it would increase the nation's staggering debt and would be illegal if used as a parallel currency.

Under current legislation, it is not possible to convert lira, and the Bank of Italy years ago transferred the equivalent value of the currency still in circulation to the state, around 1.2 billion euros (S$1.85 billion), according to the central bank's website.

It is not the first time that the mob and the former currency have been linked. In 2012, the central bank's Financial Information Unit report said it worked with the Bureau of Anti-Mafia Investigation on "suspicious transaction reports" relating to lira-euro conversions. BLOOMBERG

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