The official site of Italy's central bank

Foreign exchange market and official reserves

The tasks and functions entrusted to the Bank of Italy within the European institutional framework include foreign exchange market interventions and management of the foreign reserves.

Foreign exchange market

Consistently with the rules governing the Eurosystem, the Bank of Italy contributes to interventions on the foreign exchange market. It may be called upon to intervene on the market together with the other national central banks and the European Central Bank.

It participates daily in the teleconference with the other main central banks in order to establish the indicative exchange rates of the euro against 35 currencies; on the basis of these quotations, the ECB calculates the effective exchange rate of the euro. In addition, the Bank of Italy takes part in the meetings in which the central banks participating in the new Exchange Rate Mechanism report on their foreign exchange market activity.

Official reserves

The legal system assigns the ownership of Italy’s official reserves to the Bank of Italy; under Article 105(2) of the EC Treaty, they are an integral part of the reserves of the Eurosystem, together with the reserves owned by the ECB.

The official reserves are of fundamental importance both for the Bank and for the Eurosystem. In the first place the ECB can request the individual central banks to supply reserves to meet special needs. In the second place the national reserves permit the servicing of Republic of Italy foreign currency debt while avoiding possible distortionary effects on the market and the fulfilment of commitments vis-à-vis international organizations such as the International Monetary Fund. Lastly, since the official reserves of the individual national central banks are an integral part of those of the Eurosystem, their overall level and proper management contribute to safeguarding the credibility of the ESCB.

The Bank manages the reserves by investing them directly in international markets; it administers, in parallel with the other Eurosystem central banks and on the basis of criteria and objectives established by the Governing Council of the ECB, a part of the foreign reserves assigned to the European Central Bank at the start of Monetary Union.

• Foreign exchange market
  Central banking

• National reserves
  Markets and Payment system › Official reserves

• ECB reserves
  Markets and Payment system › Official reserves

• Community law: EC Treaty - ESCB Statute
  Eurosystem and ESCB