The European Central Bank had warned Italy of the proposed legislation, which would make the country’s vast gold reserves the property of the Italian people. This contentious amendment seeks to undermine the independence and stability that the central banks enjoy and may even violate an EU treaty. The Italian right-wing government continues to come under increasing pressure to reconsider the proposed legislation, which would sell off the gold.
Italian lawmakers challenge central bank gold ownership rights
The Brothers of Italy party, headed by Giorgia Meloni, is pressing for the introduction of an article into the budget decree that would state that the gold reserves administered by the Italian central bank, the Bank of Italy, are the property of the Italian people. This new article is an explicit challenge to the usual ownership of the gold reserves, which are an essential source of foreign exchange for the Italian central bank.
Italy possesses the third-largest national gold reserves globally, valued at around 2,452 metric tons, which are estimated to be approximately $300 billion based on their current market value. This total national gold reserve translates to around 13% of the entire national economic activity of Italy, thus representing an important element of the Italian financial structure. As per the Italian central banking authority, the gold reserves are owned by the Bank of Italy as part of the foreign exchange holdings.
Senator Lucio Malan defends gold ownership clarification efforts
Senator Lucio Malan, the Brothers of Italy party’s chief whip, explained that the proposed law merely makes it clear that the gold of Italy means the labor of the Italian people and that the gold always belonged to the Italian people. This explanation corresponds to the larger concern of the right-wing parties regarding the influence of aliens on the Italian financial gold after the Italian restructuring of the Bank of Italy.
ECB cautions against bypassing bans on monetary financing
This was reinforced by the European Central Bank’s position that it considers an offloading of the gold reserves from the balance sheet of the Bank of Italy to the state as an attempt to violate the provisions that govern monetary financing. This position was reiterated by the ECB, which had initially discussed the issue concerning the management of Italian gold reserves back in 2019. The ECB stated that it had no intention to receive instructions regarding the management of the gold reserves from national governments.
What the European authorities fear is that an adjustment of the ownership structure could allow future Italian administrations to use gold reserves as a means of paying off the already high national debt. As for the economists, they warned that it would be harmful to the Italian economy if the gold reserves were systemically reduced, as it would imply that Italy had run out of means to fund its finances.
In their opinion, the ECB further stated, “The Italian authorities are invited to reconsider the draft provision, also with a view to preserving the independent performance of the Bank of Italy.”
Political agendas instill doubts regarding monetary sovereignty
This question of ownership has been one of the peripheral matters for the right-wing Italian parties ever since the restructuring process carried out by the Italian central bank, the Bank of Italy, regarding financial institutions, which are now nominal owners of the central Italian banks. This concern was previously expressed by Meloni in the parliamentary speech of 2014 regarding expropriations of Italian Monetary Sovereignty.
The draft Italian gold ownership law is an important challenge for the Monetary Union of Europe, and it really proves the stability of the Monetary Union and the independence of the central banking system. Justification by the ECB of the new Italian draft legislation maintains the integrity of the entire system, especially during the increase of the populist tide in the entire Europe.
Disclaimer: Our coverage of investments, retirement funding, and digital assets is not financial advice. We are not responsible for any investment decisions or financial losses resulting from the use of our content. All information is provided solely for educational and informational purposes.
