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Although formally not benefiting from a constitutional status of independence, the Bank of Italy had a crucial role, in the 1970s and 1980s, in shaping economic policies in a country afflicted by intensifying imbalances and difficulties. After a decade of stagflation, even the ephemeral economic revival experienced throughout the 1980s was achieved at a price, mostly through the spiralling public debt, which eventually dramatically struck her monetary stability, forcing Italy to exit from the European Monetary System (EMS) in September 1992. Such a critical role changed during these decades in terms of relevance and direction, particularly when compared to the Bank of Italy’s political counterparts, its governments and parliament, whose decision-making processes often relied upon technical competences which were lacking. The way economists at the Bank developed their influence vis-à-vis political-sphere decisions relating to European monetary integration is a telling tale to this regard. Actually, a group of economists at its research department had acquired prominence since the mid-1970s, partly because of the essential role assigned to economic and statistical research by governor Guido Carli during the previous decade, when, fostering technical competences within the organisation of the Bank, he reshaped the Bank in order to have an up-to-date central bank. Pivotal to Carli’s central banking style were reliable data and analysis to manage monetary aggregates and steer a banking system which wa…


In the late 1970s the Bank of Italy’s economists conceived a wide-ranging response to major macroeconomic imbalances centred upon joining the European Monetary System (EMS). The choice was the result of a double blurring of the boundaries previously separating the central bank from the policy-makers as well as between the governor and the economists within the Bank itself. Thus, the Bank of Italy assumed a deputising role vis-à-vis the government in outlining economic policies as the real driving force behind the strategies devised to counter the mounting instability. The Bank of Italy exerted its influence by transcending its institutional mandate as a central bank, even though this was the pre-requisite to operate as an independent central bank, as de facto recognised in July 1981, with the so-called “divorce” from the Treasury.
JEL Classification: E58, E52, N14, B22

  • Central Banking
  • Monetary Policy
  • European Monetary Integration
  • European Monetary System (EMS)
Giandomenico Piluso
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Uploaded on on 26/09/2022
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