History of the Bank's gold reserves

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In 1893, three issuing institutes – Banca Nazionale nel Regno d’Italia, Banca Nazionale Toscana, and Banca Toscana di Credito – merged to create the Bank of Italy, which was initially endowed with its own reserve of 78 tonnes of gold, 86 per cent of which came from Banca Nazionale nel Regno. In 1926, when the Bank of Italy became sole bank of issue, the reserves of Banco di Napoli and Banco di Sicilia were transferred to it; they amounted to about 70 tonnes, virtually all from Banco di Napoli.

In 1933 the Bank’s reserves exceeded 561 tonnes, but by the time the country entered the Second World War substantial sales had reduced the stock to 106 tonnes. In 1943 the reserves were back up to around 121 tonnes, until 15.8 tonnes were transferred to the BIS, reducing them to 105 tonnes. After Italy signed the Armistice in September 1943, Governor Azzolini transferred all the gold reserves to the Bank’s Milan Branch at the insistence of the German command, except for 10.8 tonnes pledged as collateral for an advance granted by a group of Swiss banks to the National Institute of Foreign Trade (INCE) and shipped to the Swiss national bank when INCE failed to repay the loan. At the end of the year, the Germans shipped 92.3 tonnes to Fortezza, in Alto Adige, of which they removed 50.5 tonnes. In October 1944, a further 21.7 tonnes were confiscated by the Germans, reducing the total reserves to just 22 tonnes.

In May 1945, with the war over, the Allies moved the remainder of the gold reserves from Fortezza back to Rome. The following year, the Tripartite Commission for the Restitution of Monetary Gold to the countries from which it had been looted by Nazi Germany assigned to the Bank of Italy 31.7 tonnes of the 69 tonnes claimed; a further 12.7 tonnes were allotted in 1958. The amount of gold officially lost by the Bank as a result of the war totalled about 25 tonnes.

After the war, Italy soon became an exporting country, attracting large inflows of foreign currency, particularly dollars, part of which were used to buy gold, as the main European central banks (Banque de France and Bundesbank) were also doing, not least in order to comply with the Bretton Woods agreements. The Bank of Italy’s gold reserves gradually increased in the aftermath of the war and by the end of 1958 totalled 244 tonnes.

At the time, bullion purchases were also made by the Italian Foreign Exchange Office (UIC), later to become a part of the Bank of Italy, which had the task of monitoring capital movements and managing the foreign currency reserves, including the gold reserves. Its first balance sheet, dated 30 June 1946, showed holdings of 1.8 tonnes acquired from the Banque de France. Between 1951 and 1960 the UIC made massive purchases of bullion, building up its stock to just under 2,000 tonnes. Then, in 1960 and 1965, two transfers were made from the UIC to the Bank of Italy, totalling 1,890 tonnes, on the principle that the Bank had custody of the gold reserves and the UIC was responsible for managing the foreign currency reserves; the Bank’s gold holdings rose to 2,136 tonnes.

The gold reserves continued to increase in the years that followed, most notably in 1966 and 1970, reaching 2,565 tonnes in 1973. Three years later, 543 tonnes were given to the UIC to provide it with sufficient gold to transfer to the Deutsche Bundesbank as collateral for a loan, reducing the Bank’s reserves to 2,022 tonnes; the gold was eventually returned by the Bundebank between 1977 and 1979, at which time the IMF also returned 27 tonnes to the Bank. In 1979, 20 per cent of the official reserves in gold and dollars were made over to the European Fund for Monetary Cooperation (EFMC); the gold part amounted to around 517 tonnes, bringing the Bank’s bullion reserves down to 1,505 tonnes. This level remained fairly constant until 1996.

In 1997, the Bank purchased the UIC’s residual 570 tonnes of gold, raising the reserves to 2,074 tonnes. The following year, a further 518 tonnes were added when the repo transaction against ECUs with the ECB was wound up. The last changes in the stock, bringing the reserves to their current level of 2,452 tonnes, took place at the beginning of 1999 with the launch of the Economic and Monetary Union, when 141 tonnes of gold were transferred to the ECB.

The amount of gold now in the possession of the Bank of Italy is therefore the result of a series of events that have led to its becoming one of the largest holders in the world.