“The origins of banking are lost in the mists of time. But not those of central banks, whose history has been played out entirely within the span of scarcely three centuries. For each one, the date of birth is known with precision: 1668 for the central bank of Sweden, 1694 for that of England, 1800 for France, 1814 for the Netherlands, 1817 for Austria, 1850 for Belgium, 1875 for Germany, 1882 for Japan, 1893 for Italy, 1913 for the Federal Reserve Bank of the United States. This apparently exact list of dates risks being misleading, however. In fact, the central bank did not arise as the complete, full-blown institution we know today. The central bank is a body that has developed over time, progressively acquiring new and increasingly complex functions, duties and features, establishing more and more intricate and delicate relations with the rest of the banking and financial system and with the political system and the economy in general.” Thus did Carlo Maria Cipolla, in his preface to the initial volumes in the Banca d’Italia’s series of historical works, invite readers to reflect upon the identity and the functions of an evolving central bank.
The Bank of Italy was constituted in 1893 as part of an overall reorganization of Italy’s banks of issue. In 1926 the essentially public position of the Bank was accorded significant recognition, as it became the sole institution authorized to issue banknotes. It was given powers of banking supervision that would be broadened and strengthened by the 1936 Banking Law, which also formally recognized the Bank’s status as a public law institution. This remained the fundamental legislation on Italian banking until 1993, when the Consolidated Law on Banking, still in effect, was enacted. A crucial passage in the history of the Bank was the stabilization of the lira in 1947. The postwar surge of inflation was broken and the monetary conditions for the “economic miracle” of the 1950s were established. The Constitution of 1948 enshrined the principle of the “protection of savings.” Following the shocks of the 1970s to the international monetary system and the lira, Italian disinflation was assisted by stronger legal safeguards for the central bank’s independence. The re-establishment of the stability of the currency and the start made on the adjustment of the public finances enabled Italy to comply with the standards set by the Treaty of Maastricht (1992) and qualify for the lead group of countries adopting the euro as their currency in 1999. Euro banknotes and coins went into circulation in 2002.