Filettino, set in rugged hill country around 100 km (65 miles) east of Rome, is rebelling against a proposal to merge the governments of towns with fewer than 1,000 inhabitants to save money. (click below to read more)
Filettino has only around 550 people, but instead of merging with neighboring Trevi, mayor Luca Sellari is trying to go it alone and set up a "principality" along the lines of the famous republic of San Marino to the north.
He has started minting Filettino's own bank currency, the "Fiorito," with his photo on the back, which he says is already being used by the townsfolk.
"We aim to achieve real autonomy from Italy and we have the financial resources to do it," Sellari said in an interview on the town's website www.principatodifilettino.com
There was no immediate comment from the central government in Rome.
Mayors from all over Italy are up in arms about proposals to cut local government funding and merge small towns as part of a 45.5 billion euro ($65.3 billion) austerity plan to balance the country's budget by 2013.
Mayors plan a protest in Milan Monday although media reports say the government is preparing significant changes to the budget, including a substantial dilution of the proposals on local government.
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