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In Italy's draft budget bill for 2026, one particular line has drawn a fair bit of attention and international scrutiny. Namely, that quote, "The gold reserves managed and held by the Bank of Italy belong to the states in the name of the Italian people."
While Italian Prime Minister Georgia Maloney insists nothing cheeky is going on, this particular clause has led to some suspicion that her right-wing coalition might be pushing to monetize Italy's gold reserves worth roughly $300 billion and the third largest reserve in the world after the US and Germany. So, in this video, we're going to look at how Italy accumulated such vast gold reserves, whether with gold prices at all-time highs, Maloney might be planning to sell some of them. Let's start by explaining why Italy has such vast gold reserves in the first place.
Following the end of World War II, Nazi forces, aided by Italy's own fascist regime, seized 120 tons of Italy's gold reserves to fund the war. And by the war's end, these had dwindled to around 20 tons. Following the war, aided by the US Marshall Plan that gave billions of dollars for economic recovery and post-war reconstruction, the country entered a period of prosperous growth and economic recovery. Dubbed as the period of the golden age and an economic miracle, Italy's economy grew over 5% per year as Italy became an export-driven economy, selling everything from Italian handbags to cars like the Fiat 500.
With dollars flowing in from export revenues and US financial aid, Italy, like other western countries, moved to convert some of these newfound dollar reserves to gold, largely viewed as a safeguard to signal financial discipline to foreign investors, strengthen confidence in the lera, which was quite weak at this point, and provide insurance against any future financial shocks. Soon, gold holdings had climbed to 1,400 tons by 1960, which included three quarters of the seized gold, which it was able to recover in 1958.
However, in the 1980s, the Italian economy took a turn for the worst. To prop up growth, the Italian government began to borrow unsustainable amounts of money. National debt ballooned from 59% of GDP in 1980 to 123% at the end of 1994, more than double that of France and Germany. As a percentage of GDP, Italy's debt servicing cost rose from basically nothing in 1970 to 4% of GDP in 1980 and then about 10% in 1990. While that number has since stabilized at around 4%, that still doubled the OECD average. And with slow growth and productivity, Italy was hit especially hard during the 2008 financial crisis.
However, while countries such as Britain, France, and Spain sold portions of their gold reserves during financial crisis, Italy has consistently refused to do so. The Bank of Italy, which controls the reserves and is legally independent under Euro zone rules since 1999, has resisted political pressure to monetize the gold. As a result, Italy holds far more gold than many of its peers, with gold accounting for nearly 75% of its official reserves last year, compared with about 66.5% across the Euro area.
As Italy's public debt has risen steadily over the past two decades, now exceeding€3 trillion and projected to peak at 137.4% 4% of GDP next year. Populist parties on both the hard left and hard right have repeatedly raised the idea of selling part of Italy's gold holdings to reduce its debt. According to the Bank of Italy's website, the gold could be used as collateral to obtain loans or as a last resort sold on the market to buy euros to support its value. However, the bank has largely refused to do so, namely for three key reasons.
First, the Bank of Italy views gold as a strategic and untouchable national asset and an important hedge for an economy that has experienced repeated cycles of instability. Second, even at an estimated value of 300 billion euros, Italy's gold reserves would cover less than 10% of the country's outstanding debt. Third, and finally, the EU's legal framework means gold cannot be transferred to the state budget or used to finance public spending without violating European rules on central bank independence.
This has aggravated populist parties who are driven by euroskeptic or nationalist views and channeling public anger over austerity have repeatedly questioned the ownership of Italy's gold and have pushed for greater national control. In 2019, the ECB clashed with Italy's five-star Laga anti-establishment coalition when the hardright Liga Nord Party accused the ECB of keeping the gold from the people, while the left-wing five-star founder argued that selling part of the reserves could help avert a VAT increase, citing France's gold sales as precedent.
Then last Wednesday, the dispute resurfaced during scrutiny of the 2026 budget in the Italian Senate when one small but symbolic amendment survived a sweeping cull of proposed changes. The measure put forth by Melon's Brothers of Italy party states that the central bank's $300 billion in gold reserves belong to the people of Italy, not the bank.
Now, we should say that most legal experts don't think this would actually change who owns the gold or allow Maloney to easily monetize it. Ownership and control of the reserves are already clearly defined under EU treaties and Italian law, and the Bank of Italy is bound by the European system of central banks. With or without the amendment, Italy could not use its goal to finance spending or cut debt without ECB approval, which would not be granted.
Conscious of this fact, Melonian Co. have insisted they have no intention of breaking the law or monetizing the gold and have framed the reclassification in patriotic terms, arguing it would protect the nation's treasure from the central bank's foreign shareholders. Nonetheless, this all provoked a furious reaction from the opposition, including the Democratic Party, who've argued that with elections coming up, Maloney's party might use the reserves to finance populist policies like fund tax cuts or subsidies for immediate electoral wins to distract public attention from the country's sluggish economic growth. There's also the concern that dipping into the gold reserves would deprive future Italians of a crisis buffer and it wouldn't be a good look for Maloney, who's built her political platform on a hard one image of fiscal conservatism.
The ECB also hasn't been too happy and has twice urged Maloney's government to reconsider putting it in the budget, arguing that transferring gold to the state would break the ECB's rules on the prohibition of central banks financing the public sector. The debate over Italy's gold reserves comes as global interest in gold rises, with countries seeking to reduce reliance on the US dollar and bolster tangible reserves. Earlier this year, prices briefly topped $4,000 an ounce, highlighting gold's renewed appeal amid geopolitical tension and fiscal strain. Against this backdrop, the long-running question of who owns Italy's gold, as well as whether Italy should repatriate its gold, currently stored in the US, is likely to grow more intense in the years ahead.
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