Orietta Ceccoli: “From the report on banking disasters in San Marino”
I am completing the reading of the report of the Council Commission of Inquiry on bank failures and as a citizen, who loves the Republic, I am completely shocked by what I have read. I learned, through a coordinated narrative, that in the space of a few years, about 14 years, a series of irregularities, actions, many speculative actions and many predatory actions of “a clique or more” to the detriment of groups of savers and of citizens.
It follows the obligation, which must be posed individually and as a community, why did all this happen? Why did the beloved Republic enter the black hole of decay and crisis up to the risk of default? What are the causes and what are the responsibilities? Why are institutions so fragile that they have no bulwarks and counterweights to prevent the predation process from continuing and not repeating itself?
Legitimate and necessary questions !!! Questions that not only a few citizens should ask themselves, but many more citizens, who today are silent and distracted. What do you think Divine Providence will intervene? They cannot or do not want to make predictions, they have to touch the default, they have to do it on their skin, to understand! But if that’s their perspective, the solution will be more painful.
I intend to thank the entire commission of inquiry. They have produced documentation, they have concretized an important narrative, they have broken the wall of secrecy and silence of the action of the clique or cliques. Transparency is the antidote, but many do not yet want to understand what its power is. The members of the Commission of Inquiry are mostly young, with few exceptions. If these young people want to overcome the role of storytellers and take on the role of innovators, they have a lot for their action. They must assume this courage and this will, overcoming and acting within the parties to which they belong, thus becoming competent and responsible ruling class.
Enter the black hole
Entering the black hole is a metaphor, in order to list the phases of a perverse process, which can be found in the report of the Commission of Inquiry. Indeed, the full report should be delivered to all San Marino families. At least one member per family should read and comment on it in the family context.
The financialization process of the San Marino economy starts with people or groups of people who have business projects in the banking and financial sector, a very delicate field, to be regulated and monitored. They have diversified entrepreneurial and professional skills, mostly insufficient, but precise objectives of a purely speculative nature. They ask for banking and professional licenses and transactions with ease.
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The Congress of State, with a different composition according to the majorities in power, grants banking licenses (1999-2003), but, as stated, there are no checks on the professionalism of the subjects authorized to carry out the management of savings and credit and the checks on the necessary integrity of the managers of banking and financial companies (see pages 56 to 66).
In cases, corruption phenomena emerge through bribes and the use of “bearer passbooks”. The topic can be explored following the judicial trend.
They are made up of bank partners and not only documented ones, who want pure speculative purposes, who want pure credit to their own bank the same Institute. These loans are granted with little attention to the creditworthiness and solvency criteria of the fruit, which are indispensable. So much so that these credits are not returned and NPLs (non-performing credits) are created, which negatively affect the balance sheets of some banks. Economic and financial management of banking institutions of this nature, cause significant time wasters of exercise, which over time absorb the social capital of the same institutions.
Two concepts go viral: the bank must not go bankrupt; the financial investment should be covered “. Starting with the policies and strategies for covering bank losses with the tax credit or subsidies for capitalization of some institutions. The burden of bank losses are transferred to the public budget, then the burden is added to the citizen and the taxpayer. To consider the different treatment of business risk: company law places the burden of business risk on the entrepreneur of the real economy and regulates the institution of bankruptcy. The treatment of the banker is different and the responsibility of the directors is different, who in many cases, as in the report, are covered in their responsibilities by indemnities or ratifications.
The strategy just defined causes a liquidity crisis in the state budget.
The solution adopted to tackle this crisis is to resort to foreign debt, with high interest rates and short-term repayment times for foreign debt.
The interest rates of foreign debt heavily affect the state budget and instead of aiming for a positive primary balance, also through the requalification of public spending, the aim is to increase the annual deficit. The foreign loan obtained from the financial markets is intended to give subsidies to banks and to cover current expenses, so much so that some politicians say to the population “we paid your wages and pensions! Why critical! ” If Mario Draghi were asked to give his assessment of the San Marino debt and its destination, he would say “But this is bad debt !!! We need to change course !!! “
We are always inside the black hole and we are always on the same path. But here the saving word becomes Reforms. But what reforms: certainly not those to increase national wealth, collective well-being. Reforms to draw resources from citizens, from contributions, from retirees. These are the prospects in place, just wait to know that you are right or wrong. The second saving word becomes the creation of new debt, this time internal. But even with this solution we are, as a Republic, always inside the black hole.
A first positive step has been taken, the analysis of our troubles. One way to move forward and to get out of the black hole can be to identify the criticalities of the system and use all human and professional resources to identify and define the policies and strategies to escape the current perverse path. Pope Francis says: hope does not disappoint. Our anchor is in hope.
Orietta Ceccoli