The first important cycle of the life of the Bank can be enclosed in the year of his birth, and the explicit statement of its public nature, in. the founding of the Bank of Italy, was fundamental because: redefined the system of the circulation paper, which was based on the metal cover of the tickets (more precisely: of the forty percent of them) and an emission limit absolute laid the foundations for the consolidation of the banks started the process of transition to a bank of issue, only introduced policies that put the public interest above the needs of the profit of the shareholders (e.ggovernment approval for the appointment of the head of the Bank - it was then the Director - General is to changes in the discount rate). In those years, Giuseppe Marchiori, Director-General from to, he began in a practical way to marginalize the interests of private shareholders and to affirm the accession of the Institute to public policy objectives. On the other hand, the Bank remained a private limited liability company, that he exercised the right of monetary emission in a regime of concession. Significant part in the evolution of the Bank had then appointed, in, Bonaldo Stringher to the General Manager of the Bank. Age giolitti, the Bank was able to reconcile, especially given the economic framework favourable to financial stability and of the exchange with the support to production activities. In he was reached the old parity of the lira with gold from Italy, it was as if adhered to the gold standard, but, instructed by the past crisis not officially declared the convertibility of the currency. In, the conversion of the Income in italy was successfully treated by the Bank is stated so definitively the function of the banker, and then advisor of the Government, the role that were added to the previous treasurer. In parallel with the economic recovery, and the process of industrialization, the credit system had changed: in the space created by the crisis of - - which saw the failure of the two most important banks in securities - developed a new system where the bulk of credit intermediation began to pass by the three banks of issue survivors (Bank of Italy, Banco di Napoli and Banco di Sicilia) to the big banks mixed recently founded (Banco di Roma, Banca Commerciale Italiana and Credito Italiano). In, the Bank of Italy intervened effectively in order to stem a grave financial crisis, establishing its function of lender of last resort, and consolidating on its reputation.
To facilitate this task, the system of the circulation was made more elastic with a law passed at the end of the year.
He began to hear the opportunity of a control function on the banking companies. On the eve of the first world war, the Bank of Italy held a central position in the panorama of national financial: for the importance of its credit in the economy of the Country, for the work carried out in favour of financial stability, to the strengthening of the reserves of metal, for the competition is provided to the Treasury in public debt management. In the course of the first world war, the Bank thought widely the Treasure: the credit is direct, with the assistance for the placement of loans, the war within, with the management of financial transactions with foreign countries. The coupling of the lira to gold was abandoned and established the state monopoly of foreign exchange.
After the war, the difficulties of reconversion put in crisis many sectors of the industry and the lending institutions that had financed largely up to determine serious bank failures.
The Bank of Italy carried out with the agreement of the Government, massive rescue operations. On the plan currency you overcame the monopoly of the foreign exchange but, in the new circumstances, the return to normal monetary it was impossible: the tools of control of the circulation in the force were totally devoid of effectiveness. In all countries and in international fora, argued about how to return a system to the metal base. Italy held a conservative approach, oriented to the classical gold standard In a scenario tend to be inflationary, it came in with the decision of the fascist government to revalue the lira, by deflating the economy. As part of this plan of currency stabilization and return to gold (made by the Bank of Italy, in spite of the doubts of Stringher on the strong risk deflativi), over a three year period were introduced important reforms. The Bank of Italy was awarded the monopoly of emission, and entrusted with the management of clearing houses, hubs in the central of a modern payments system. It was also enacted a law for the protection of savings, was established for banks and special requirements, including a minimum capital, and assigned to the Bank of Italy's new powers of control, the first core of the supervisory function of credit. The work of reform was completed in - with the fixing of the new gold parity for the lira and the recovery of convertibility into gold or foreign exchange convertible to, the obligation to maintain a reserve in gold or foreign exchange convertible to not less than forty percent of the circulation, the redefinition of the relationship with the Treasury. The effect of these measures, the Institute, abandoning the old role of “bank of circulation”, was to assume the functions of a proper central bank and supervisory body of the credit system, and accentuated his character as a substantial public body. In it was approved the new Statute, which established the figure of the Governor, located at the vertex of the steering committee (composed of the Governor, the Director General, Deputy director-General) the responsibility for the operation of the discount rate went from the high Council to the Governor, always subject to the approval of the Government. Dead Stringher in, the management of the Bank passed to Vincenzo Azzolini, coming from the Treasury.
In the midst of the Great Depression, the devaluation of the pound sterling (in September) and most of the other coins equivalse to a further appreciation of the lira.
It is emphasized the character deflativo of Italian politics and heavy were the consequences on economic activity and on the financial system. The State and the central Bank rescued from collapse of the leading banks in the mixed, swollen with shareholdings increasingly devalued. The Bank of Italy found itself with a surplus of strongly immobilized and therefore unable to maneuver further. Were created prior to the Istituto Mobiliare Italiano (IMI) with the task of ensuring the financing of the medium-to long-term period, and then the Institute for Industrial Reconstruction (IRI), which acquired the shareholdings of banks in difficulty, and the control packets of the same bank. In the mid-Thirties the tensions that would have led to a new world war began on the plan monetary and currency in the termination of the convertibility of the lira into gold and in the suspension of the gold reserve (which will not be restored). In this is the context of the preparation for the war (in he began the aggression of Ethiopia) was developed, in the context IRI, the law of the banking reform of. A first part (still in force) of the law defined the Bank of Italy “the institute of public law” and entrusted it definitively the emission function (no longer, then, in granting) the private shareholders were expropriated of their shares, which were reserved to financial institutions of public relevance to the Bank was forbidden to the direct discount to non-banks, thus emphasising its function as a bank of banks.
A second part of the law (which was repealed almost entirely in) was dedicated to the supervision of credit and financial: it redesigned the whole structure of the credit system in the sign of the separation between bank and industry and of the separation between the short-term credit and long-term called the banking function of the public interest focused the action of supervision within the Inspectorate for the the defence of savings and exercising of credit (the state body of the new creation), chaired by the Governor, acting with the means and staff of the Bank of Italy, but directed by a Committee of ministers chaired by the head of the Government.
Aware of the developments of the economic science and of the challenges posed by a world in continual and traumatic development, the Governor Azzolini began the creation of a modern Service Studies, through the assumption of economists and professionals. At the end of, devaluation of the lira, long-awaited, promoted the economic recovery and the rebalancing of the external accounts. At the same time, the effect of a simple ministerial decree, it was removed all limits to the possibility for the State to finance itself through debt to the central Bank: the autonomy of the latter touched the lowest point.
