Sovereign swaps users should learn from Italy’s mistakes

Posting collateral is a cost debt offices must embrace, argues Stefania Perrucci

Italy-derivatives-headache
New decrees allow Italy's debt office to post collateral, but the changes come too late
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Would Italy have a different book of derivatives if it had always been required to post collateral to its dealer counterparties?

It’s impossible to know, of course, but the question is worth asking because of the situation the country now finds itself in. The derivatives portfolio amassed by the Tesoro – the state treasury – had a notional value of €111.3 billion ($126 billion), with a mark-to-market value of negative €29.8 billion, as of December 31, 2018.

In the post-crisis years, banks have

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