After national unification in 1861 Italy remained economically behind the leading European countries. Per capita GDP was less than half that of the UK and a little over half of the French figure. The banking system was composed of small individual banks, a small number of public institutions and a few banks of issue; banknote circulation was sparse.

The banks of issue had been established in the pre-unity states during the first half of the nineteenth century. United Italy had a single currency (the Italian lira, created by the Pepoli Law of 1862) but fragmented banknote circulation, because almost all of the banks of issue operating in the old states had maintained their right to issue their own banknotes in the new Kingdom of Italy: Banca Nazionale nel Regno d'Italia (which resulted from the merger of Banca di Genova and Banca di Torino) in the North; Banca Nazionale Toscana in the Centre, and flanked in 1863 by Banca Toscana di credito per le industrie e il Commercio; Banco di Napoli and Banco di Sicilia in the South. The number of banks of issue rose to six when, after the annexation of Rome in 1870, the Bank of the Papal States became Banca Romana.

All of these banks issued lira banknotes, convertible into gold, and were in competition with one another. Two, Banco di Napoli and Banco di Sicilia, were public, the others private; all were supervised by the State. The end of convertibility, in 1866, caused banknote circulation to surpass metallic currency.

The first law of the newly unified State on banknote issuance was enacted in 1874. This law specifically identified the six institutions authorized to issue banknotes and thereby created a legalized and regulated oligopoly. That is, a single bank of issue was not established, largely because of the strength of regional interests that did not want to deny themselves a local issuing bank.

As bank deposits were not common, the principal source of funds for lending was the issuance of banknotes. In effect, by accepting these banknotes the public provided credit to the issuing banks, which in turn provided credit to their clients. It was only in the 1870s that non-issuing banks (i.e. banks analogous to those we know today) began to be founded, such as Credito Mobiliare and Banca Generale, with nationwide coverage and international contacts. In this context the banks of issue retained an important role. Mainly by discounting bills, they made an essential contribution to the financing of production and investment, helped to combat usury and favoured thoroughgoing transformation of Italy into a monetary economy.

The return to convertibility, decreed in 1881 and put into practice in 1883, marked the beginning of a short-lived illusion; euphoria caused economic overheating, to which the appropriate policy response was not forthcoming. By 1887, de facto, the lira was again non-convertible. The building boom triggered by the new national capital, Rome, and fuelled partly by foreign investment, also involved the banks of issue. Overexpansion brought a speculative bubble, followed by crisis. The banking crisis of the early 1890s, coupled with a foreign exchange crisis, took on a scandalous political and judicial dimension in December 1892, when the unsustainable situation of the banks of issue was revealed, and especially the grave irregularities committed by Banca Romana, until then kept secret by the government.

In an extremely difficult situation, and after a series of bitter political battles, the country found the strength to respond. Sidney Sonnino's idea of radically refounding the system of banknote issue was discarded, and the line taken by Prime Minister Giovanni Giolitti prevailed. The law of 1893 introduced new regulations for issuing banknotes and led to the foundation of the Bank of Italy, with the merger of three existing institutions, Banca Nazionale and the two Tuscan banks; it was headed by Director General Giacomo Grillo. Banca Romana was liquidated, while the Southern banks of issue continued in business.