Italian party wants to nationalize central bank

The Italian opposition party Fratelli d'Italia has launched a new Legislative proposal submitted to nationalize the central bank. The bill was introduced by an opposition party, but also has the support of a parliamentarian from the ruling Five Star Movement. Whether the bill can count on a majority remains to be seen, but it does show that more and more pressure is being exerted on the central bank. Earlier this month, for example, Lega Nord came up with a proposal to sell the central bank's gold reserves.

Italy's central bank manages a significant gold reserve of 2,451.8 tonnes. This reserve is included in the current Gold price worth more than €90 billion. Politicians would like to use this reserve for political purposes, but that is not possible as long as the central bank manages the reserves. Earlier this month, Claudio Borghi, economic spokesman for Lega Nord, said their party had no real intention of selling the central bank's gold stockpiles.

Central Bank Gold Reserve

Italy has the largest gold reserve in the world after the United States and Germany. It is the central bank's most important reserve, as the precious metal represents 68% of its Total Assets. It is not surprising that politicians are now exerting pressure on their own central bank. Last year, the European Commission made it clear that Italy must also comply with the budgetary rules. The aim is for European countries to work towards a balanced budget, so that they are less vulnerable in the next crisis.

Putting the budget in order is not a popular measure, but it is one that is necessary for long-term stability. During the European debt crisis, Italy came under fire for its high public debt. The interest rate on Italian government bonds then rose to 7%, after which the ECB decided to intervene. The central bank's bond-buying programme has taken the pressure off, but that does not solve the problems. For example, the Italian banking sector is still struggling with many Bad loans. Against that backdrop, it's probably not a good idea to sell the gold stock.