Game theory application of Monti's proposal for European government bonds stabilization

The aim of this paper is to present an extension of Mario Monti’s proposal, presented at the European Council of June 28-29 2012, about the possible stabilization of the value of government bonds issued by the European States. In particular, by using Game Theory, we focus our attention on three players: a large bank, that has immediate access to the market of government bonds, (hereinafter called Speculator, our first player), the European Financial Stability Facility (EFSF, the second player) and a State in economic difficulty (our third player). We propose on financial transactions the introduction of a tax (cashed directly by the State in economic difficulty), which hits only the speculative profits. We show that the above tax would probably be able to avert the speculation, and, even in case of speculation on its government bonds, the State manages to pull itself out of the crisis. Finally, we also propose a cooperative solution that enables all economic actors involved (the Speculator, the EFSF and the State) to obtain a profit.