Abstract
The chapter explores the origins and consequences of rising public debts in Italy since the 1970s. The Banca d’Italia was now able to increase its institutional power and to become one of the most powerful central banks in Europe. At the same time, the financial sector profited from the massive expansion of the sovereign debt market in Italy. Through high saving rates, private households financed a huge part of the public debt. The chapter analyzes how internal political and economic coalitions were a decisive aspect of the new system of debt management. The successful mobilization of domestic institutional investors and private households also explain why Italy was able to prevent dramatic bank insolvencies or external debt crises during the 1970s. The chapter argues that Italy’s reorganization of the sovereign debt market was efficient in creating short-term solutions. However, in a long-term perspective, this strategy was not sustainable and created the problems that Italy is facing today.
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Notes
- 1.
Archivo storico della Banca d’Italia (ASBI), Carte Baffi, Monte Oppio, b. 24, fasc. 1: Guido Carli to Minister of Treasury Ugo La Malfa, 8/8/1973: Tommaso Padoa-Schioppa to Paolo Baffi, 23/1/1976.
- 2.
Hansjörg Siegenthaler, Regelvertrauen, Prosperität und Krisen: Die Ungleichmäßigkeit wirtschaftlicher und sozialer Entwicklung als Ergebnis individuellen Handeln und Lernens (Tübingen: Mohr Siebeck, 1993).
- 3.
See, for example, Stefano Battilossi, “Structural Fiscal Imbalances, Financial Repression and Sovereign Debt Sustainability in Southern Europe, 1970s–1990s,” in The Political Economy of Public Finance. Taxation, State Spending and Debt since the 1970s, eds. Marc Buggeln, Martin Daunton and Alexander Nützenadel (Cambridge: Cambridge University Press, 2017), 262–98.
- 4.
See Roberto Artoni and Sara Biancini, “Il debito pubblico dall’Unità ad oggi,” in Storia Economica d’Italia, eds. Pierluigi Ciocca and Gianni Toniolo (Rome/Bari: Laterza: 2004), 269–380; Franco Spinelli, “Dimensione, composizione, quotazioni e costo del debito pubblico interno dal 1861 al 1985. Con una appendice sul debito estero,” in Idem, Per la storia monetaria dell’Italia (Turin: Giappichelli, 1989), 301–55; Francesco Rèpaci, La finanza pubblica nel secolo 1861–1960 (Bologna: Il Mulino, 1962); see also Alexander Nützenadel, “Im Schatten des Staates. Öffentliche Schulden, Kreditmarkt und private Vermögensbildung in Italien nach 1945,” Geschichte und Gesellschaft 41 (2015): 447–464.
- 5.
See Ragioneria Generale dello Stato, Il bilancio del Regno d’Italia dal 1862 al 1912–13 (Rome: Tipografia dell’Unione, 1914); Giuseppe della Torre, “Collocamento del debito pubblico e sistema creditizio in Italia (1861–1914),” in Storia d’Italia, Annali 23: La banca, eds. Alberto Cova et al. (Torino: Einaudi, 2008), 401–20.
- 6.
Giancarlo Salvemini and Vera Zamagni, “Finanza pubblica e indebitamento tra le due Guerre Mondiali: Il finanziamento del settore statale,” in Ricerche per la Storia della Banca d’Italia. Problemi di finanza pubblica tra le due guerre, 1919–1939, eds. Sergio Cardarelli et al., vol. 2 (Rome/Bari: Laterza, 1993), 139–234.
- 7.
Paolo Baffi, “La lira nell’ultimo quarto di secolo,” in L’economia italiana dal 1861 al 1961 (Milan: Giuffré, 1961), 453–86.
- 8.
See Carmen Reinhart and Kenneth S. Rogoff, This Time is Different: Eight Centuries of Financial Folly (Cambridge, Mass.: Harvard University Press, 2009), database: http://www.reinhartandrogoff.com/data/browse-by-country/countries/italy/
- 9.
Gianni Toniolo, “La politica monetaria degli anni ’50 (1947–1960),” in Sviluppo e crisi dell’economia italiana, ed. Giampiero Franco (Milan: Etas Libri, 1979), 48–71.
- 10.
Rolf Petri, Storia economica d’Italia. Dal fascismo al miracolo economico (1918–1963) (Bologna: Il Mulino, 2002), 197–203.
- 11.
The Committee was established in 1947 as a supervisory body for the banking system and monetary policy in general. The Minister of the Treasury was also the head of two other important bodies of monetary policy, the Permanent Commission of Supervision of Note Circulation and the Commission of the Bank of Issue. Moreover, a high official of the Ministry was present at all meetings of the Board of Directors of the Central Bank; see Fulvio Fenucci, Il concorso del Comitato interministeriale per il Credito e il Risparmio alla determinazione dell’indirizzo economico (Naples: Liguori, 1984).
- 12.
Eric Monnet, Controlling Credit. Central banking and the planned economy in postwar France (1948–1973) (Cambridge: Cambridge University Press, 2018).
- 13.
Christian Grabas, “Planning the Economic Miracle? Industrial Policy in Italy between Boom and Crisis,” in Industrial Policy in Europe after 1945. Wealth, Power and Economic Development in the Cold War, eds. Christian Grabas and Alexander Nützenadel (Basingstoke: Palgrave Macmillan), 2014, 182–214.
- 14.
Ignazio Musu, Il debito pubblico (Bologna: Il Mulino, 1998), 80–85.
- 15.
Piero Giarda, “La crescita della spesa pubblica negli anni ’70,” Rivista Milanese di Economia 5 (1983): 139–60; Giancarlo Morcaldo and Giancarlo Salvemini, “Il debito pubblico. Analisi dell’evoluzione nel periodo 1960–83 e prospettive,” Rivista di Politica Economica LXXIV (1984): 1407–45.
- 16.
Figures in Ministero del Tesoro, Relazione, p. 65; see also ASBI, Direttorio, n. 65, fasc. 1: Guido Carli to Minister of Treasury Emilio Colombo, 13/1/1970, 2; see also: Maurizio Ferrera, II welfare state in Italia. Sviluppo e crisi in prospettiva comparata (Bologna: Il Mulino, 1984).
- 17.
Spinelli, Dimensione, 334, 343.
- 18.
See Chap. 15 in this volume.
- 19.
Spinelli, Dimensione, 323.
- 20.
Already in 1973, treasury bonds issued with an interest rate of 7 percent were not sold on the market anymore; see ASBI, Direttorio, n. 67, fasc. 3: Guido Carli to Minister of Treasury Ugo La Malfa, 24/7/1973 and 8/8/1973.
- 21.
Ministero del Tesoro, Relazione del Direttore Generale alla Commissione Parlamentare di Vigilanza. Il Debito Pubblico in Italia 1861–1987, vol. 1 (Rome: Istituto poligrafico e Zecca dello Stato, 1988), 78.
- 22.
Morcaldo and Salvemini, “Il debito pubblico,” 1418.
- 23.
ASBI, Carte Baffi, Monte Oppio, n. 80, fasc. 4: Tommaso Padoa-Schioppa, Tecniche di Emissione dei Buoni Ordinari del Tesoro, 1975.
- 24.
This manifested itself already one year after the introduction of the new auction process; see Banca d’Italia, Relazione annuale 1975 (Rome: Centro di Stampa, 1976), 230–1.
- 25.
Following a temporary reprieve in 1974/75 in the wake of the introduction of the auction process, in 1976 the central bank again had to acquire sovereign bonds to the tune of 9280 billion lira (compared to 5410 billion lira in 1975); see Banca d’Italia, Relazione annuale 1976, 214.
- 26.
Francesco Balletta, “Debito pubblico ed efficienza del mercato finanziario in Italia nella seconda metà del Novecento,” in Debito pubblico e mercati finanziari in Italia: secoli 13.-20, eds. Guiseppe de Luca and Angelo Moioli (Milano: Franco Angeli, 2007), 642.
- 27.
Ministero del Tesoro, Relazione, 68.
- 28.
See Marcello De Cecco, “Banca d’Italia e conquista politica del sistema del credito. Tecnocrazia e politica nel governo della moneta tra gli anni ’50 e ’70,” in Idem, Il governo democratico dell’economia (Bari: De Donato, 1976); Alberto Predieri, Il potere della banca centrale: Isola o modello? (Citta di Castello: Passigli 1996).
- 29.
Salvatore Rossi, La Politica Economica italiana 1968–1998 (Rome/Bari: Laterza), 46.
- 30.
ASBI, Carte Baffi, Monte Oppio, n. 115, fasc. 5: Rapporto Servizio Studi, 14/7/1969.
- 31.
Banca d’Italia, Relazione 1970, 195.
- 32.
Banca d’Italia, Relazione 1975, 231.
- 33.
ASBI, Direttorio, n. 66, fasc. 1: Guido Carli to Minister of Treasury Emilio Colombo, 19/9/1971.
- 34.
Banca d’Italia, Relazione 1973, 240.
- 35.
Giandomenico Scarpelli, La Gestione del Debito Pubblico in Italia: obiettivi e tecniche di emissione dei titoli di Stato dagli anni settanta ai giorni dell’euro (Rome: EDI Bank-Bancaria editrice, 2001), 27.
- 36.
ASBI, Banca d’Italia, Direttorio – Carli, Pratiche, n. 67.0, fasc. 3: Guido Carli to Minister of Treasury Ugo La Malfa, 8/8/1973; see also Francesco Balletta, “Debito pubblico,” 640–1.
- 37.
Banca d’Italia, Relazione 1973, 241.
- 38.
By the early 1980s, the bank’s share had dropped to below 20 percent of the bonds in circulation; see Balletta, “Debito pubblico,” 656 and 658.
- 39.
Spinelli, Dimensione, 332–3.
- 40.
Ibid.
- 41.
See Antonio Confalonieri and Ettore Gatti, La Politica del Debito Pubblico in Italia, vol. 2 (Bari/Rome: Laterza 1986); Giancarlo Morcaldo, La Finanza Pubblica in Italia (Bologna: Il Mulino, 1993).
- 42.
Ministero del Tesoro, Relazione, 71.
- 43.
Banca d’Italia, Relazione 1978, 193.
- 44.
See Morcaldo and Salvemini, “Il debito pubblico,” 1408–55.
- 45.
Spinelli, Dimensione, 350; nevertheless, state companies such as Enel increasingly relied on foreign loans from the early 1970s; see Ministero del Tesoro, Relazione, 68; ASBI, Direttorio, n. 65, fasc. 1: Guido Carli to Minister of Treasury Emilio Colombo, 13/1/1970, 2.
- 46.
W. Elliot Brownlee and Eisaku Ide, “Fiscal Policy in Japan and the United States since 1973: Economic Crises, Taxation and Weak Tax Consent,” in Political Economy of Public Finance, 57–82.
- 47.
For a general comparative account see Sheldon Garon, Beyond Our Means: Why America Spends While the World Saves (Princeton: Princeton University Press, 2012).
- 48.
Ministero del Tesoro, Relazione, 61.
- 49.
Mario Baldassarri and M. Gabriella Briotti, “Bilancio pubblico ed. economia italiana negli anni ’70 e ’80: dalle radici del debito alla manovra di risanamento, una ‘ristrutturazione’ da fare”, Rivista di Politica Economica LXXX (1990): 421–38. It was thus significantly higher than in Japan or West Germany, which had savings rates at the time of 11 percent; see ibid.
- 50.
Ibid., 423.
- 51.
Ministero del Tesoro, Relazione, 85.
- 52.
Scarpelli, Gestione del Debito, 29; Salvatore L. Francesca, “Sistema bancario e mercato obbligazionario in Italia nella seconda metà del Novecento,” in Debito pubblico e mercati finanziari in Italia (secoli XIII–XX), eds. Giuseppe De Luca and Angelo Moioli (Milan: Franco Angeli 2007), 704.
- 53.
Also see Filippo Cavazzuti, Debito pubblico, ricchezza privata (Bologna: Il Mulino, 1986).
- 54.
Michele Salvati, “Gli anni ottanta e il debito pubblico,” in Pensare la contemporaneità. Studi di storia per Mariuccia Salvati, eds. Paolo Capuzzo et al. (Rome: Viella, 2011), 257–72.
- 55.
Benjamin Lemoine, “The Politics of Public Debt Financialization: (Re)Inventing the Market for French Sovereign Bonds and Shaping the Public Debt Problem (1966–2012),” in Political Economy of Public Finance, 240–261; see also Chap. 15 in this volume.
- 56.
Wolfgang Streeck, Buying Time: The Delayed Crisis of Democratic Capitalism (London and New York: Verso Books, 2017).
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Nützenadel, A. (2020). The Political Economy of Debt Crisis: State, Banks and the Financialization of Public Debt in Italy since the 1970s. In: Barreyre, N., Delalande, N. (eds) A World of Public Debts. Palgrave Studies in the History of Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-48794-2_16
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