Blurring boundaries: The Economists at the Bank of Italy and the Making of the European Monetary System, 1975-1990

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.