Bond managers prepare for volatility in Europe as Italy plans new 'currency'

Proposals for new 'mini-BOTs' mooted

Fixed income managers are readying themselves for a flight to safety in the European markets as Italy renews its bid to launch what could effectively be a dual currency for the country.

In what was seen as a controversial move, Italy's coalition government - comprised of the hard-right Northern League and the populist Five Star Movement - has proposed the issuance of low-denomination government bonds that would be circulated alongside euros. The non-interest-bearing treasury bills would be known as mini-BOTs from the acronym of Buoni Ordinari del Tesoro (BOT), or Ordinary Treasury Bonds, and would be smaller than the lowest denomination of standard treasury bonds, which is €1,000. The bonds would be used to pay off the state's debts to companies and individuals. "...