Re: ISMA study on derivatives use by governments

Please let us know if there is anything that we should NOT do or say in
relation to this in order not to harm the relationship with the Italian
regulators.
----- Original Message -----
From: "Luciano Steve" <LucianoSteve@intesabci.it<
To: "Robert Pickel" <RPICKEL@isda.org<
Cc: "ISDA BOARD" <BOARD@isda.org<; "Ruth Ainslie" <RAinslie@isda.org<;
"Emmanuelle Sebton" <esebton@isda-eur.org<; "Richard Metcalfe"
<rmetcalfe@isda-eur.org<
Sent: Tuesday, November 06, 2001 8:50 PM
Subject: Re: ISMA study on derivatives use by governments

< Today's FT (page 6 of the European edition) reports fully and faithfully
about
< the debt management via swaps of the Italian Treasury, and about the Yen
< transaction that was apparently singled out in the ISMA study. Eurostat
has
< always been aware of the transactions, that have been specifically
approved. I
< attach a Bloomberg release on the issue. It is interesting that the ISMA
study
< is no longer available on ISMA web site. Also, I don't see in today's news
any
< trace of the press conference announced in the ISMA press release.
<
< Luciano Steve
<
< Robert Pickel wrote:
<
< < <<ISMA.pdf<< Attached is a copy of a press release from ISMA regarding
a
< < study that they are releasing regarding the use of derivatives by a
European
< < government allegedly to facilitate its entry into EMU. This was reported
on
< < in the newspapers today. We are checking on the nature of the study. Any
< < information any of you can provide would be appreciated.
< <
< < Bob
< <
<
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< < Name: ISMA.pdf
< < ISMA.pdf Type: Acrobat (application/pdf)
< < Encoding: base64
< < Download Status: Not downloaded with message
<
<

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< ANS 06:23 STATE AUDITOR OFFENDED OVER EMU ALLEGATIONS
<
< R ECS BLG XQKH
< STATE AUDITOR OFFENDED OVER EMU ALLEGATIONS
<
< (ANSA) - Rome, November 6 - Italy's State Auditor General
< Andrea Monorchio today said he was "deeply offended" by
< allegations in the foreign press that Italy had "juggled the
< books" in order to qualify for European Monetary Union (EMU)at
< the end of the 1990s.
< The allegations, appearing in Britain's Financial Times and
< The Guardian, as well as the Wall Street Journal, involved
< Italy's use of a currency swap to "disguise" the exact amount of
< its deficit in order to meet the parameters to join the euro.
< According to Monorchio, these allegations were "mental
< masturbation."
< Yesterday's press reports were based on a report by the
< International Securities Market Association (ISMA), a
< self-regulatory organization, and the Council on Foreign
< Relations, an independent US-research group, in which a case was
< outlined where a European country appeared to have used the
< derivatives market to hide the exact size of its budget deficit.
< Although Italy was never named in the report, the FT said,
< the report cited a case in which a 1995 bond issue was used in a
< 1997 currency swap aimed at temporarily reducing a country's
< budget deficit. This example, the FT said, coincided exactly
< with what happened with Italy's 1995 200 billion yen bond issue.
< Italy's qualification for EMU was orchestrated by
< then-Premier Romano Prodi, now president of the European
< Commission, and then-Treasury Minister Carlo Azeglio Ciampi,
< Italy's current head of state.
< "I am deeply offended," Monorchio said on the sidelines of
< a meeting here with the Industrialists Union, "I worked very
< long and hard with Ciampi. We closed 1997 with a spending
< deficit of 2.7% (of GDP) because the European Union would not
< allow us to calculate nine trillion lire in revenue from the
< sale of gold reserves. Otherwise our budget deficit would have
< been, according to Eurostat, 2.4-2.5%."
< After recalling that the EU yesterday was quick to deny
< that Italy had in any way juggled its books, Monorchio added
< "Can anyone seriously imagine someone like President Ciampi
< involved in such skulduggery?"
< "I myself am just a simple accountant and intend to remain
< one," he concluded.
<
< FA
< -0- Nov/06/2001 11:23 GMT
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