Treasury services

The Bank of Italy ('the Bank') performs treasury services on behalf of the State. In this role, it executes payment orders issued by general government bodies and collects all amounts due, both domestically and cross-border.

Collections and payments are settled on a government account with the Bank, called the 'Treasury single account'.

The Bank provides periodic statements of payments and collections to the Court of Auditors, the State General Accounting Department and the general government bodies. In addition, it provides general government cashiers and treasurers with daily information on the transactions carried out. As accounting agent, the Bank is also required to provide the Court of Auditors with a judicial account of its operations.

The procedures used to carry out this service are governed by a regulatory framework comprising the State Accounting Law and the State Accounting Regulation, as well as a number of other laws, ministerial decrees and agreements between the Bank and the Ministry of Economy and Finance (MEF) that illustrate the nature of the service and lay down its organization and accounting rules. There are two main agreements with the MEF, one on the State treasury service and one on the general government transactions information system (SIOPE). The latter was renewed in 2019 to take account of the new tasks taken on to manage the SIOPE+ platform. The detailed rules are laid down in the 'Instructions on the State treasury service', contained in a decree of the Ministry of Economy and Finance dated 29 May 2007.

The Bank performs the treasury services also at its branches, which handle mainly collections and payments over the counter.

The Bank handles seizures against public and private entities of which it is notified in its capacity as garnishee:

• as part of its treasury services, the Bank handles seizures against general government bodies or against the beneficiaries of payments ordered by those bodies;
• the Bank also handles seizures against holders of TARGET accounts (banks and Poste Italiane) and other private entities that have claims with the Bank. This includes non-judicial seizures notified by tax collection agents.

In addition to taking care of payments and collections for general government bodies and their local units, the Bank keeps the accounts of some non-central government entities, including local governments: under Law 720/1984, the liquid assets of non-central government entities and bodies are handled through a single Treasury system. The single Treasury system has been a useful tool for Italy's public finances from the outset; it has helped rationalize financial and data flows between the central government, the public bodies and the banking system. Under Decree Law 1/2012, there currently is a 'pure' single Treasury system in place, whereby the entities own revenues and the transfer payments from the central government budget all flow directly to the 18,000 Special Treasury accounts held with the Bank.

The provision of treasury services on behalf of the central government is among the Bank's longest-standing functions. The Bank has been entrusted with this task since 1894, with the assignment being extended by a series of acts. The latest one was Law 104/1991, which lengthened the term of the agreement from ten to twenty years and instituted its automatic renewal, without prejudice to the right of either party to withdraw by giving notice at least five years before expiry. As neither party exercised the right of withdrawal by the end of 2005, the agreement was tacitly renewed through 2030.

The Bank takes care of collections and payments also on behalf of Italy's tax offices (Revenue Agency, Customs Agency and State property office) as well as of INPS, for temporary income support payments only.

These activities are independent cashier services that the Bank may perform, under Article 35 of its Statute, on behalf and at the risk of third parties, without prejudice to the limitations set by Chapter IV of the ESCB Statute.

The Treasury single account

As part of its treasury function, the Bank holds the Treasury single account to settle all transactions carried out on behalf of the central government and other general government bodies that keep their funds in the Treasury. In accordance with EU legislation, which prohibits ESCB national central banks from financing the general government in any way, the Treasury single account cannot have a negative balance.

The rules governing the Treasury single account have been amended over the years, reflecting the changes in national legislation and in the guidelines and decisions issued by the European Central Bank.

Prior to 30 November 2011, the balance on the account was remunerated at the average yield on the Treasury bills (BOTs) issued in the previous half of the year. After 30 November 2011, the balance on the Treasury single account up to €1 billion was remunerated at the main refinancing operations rate (MRO rate) in accordance with the changes introduced by Article 47 of Law 196/2009 on public finance and accounting governed by the 'Agreement for the management of the Treasury's account with the Bank for treasury services and other equivalent accounts' dated 22 March 2011. Overnight deposits on the Treasury single account above the €1 billion threshold were not remunerated. Time deposits at the Bank were remunerated at the EUREPO rates for their respective maturities.

In application of ECB decisions 2014/8 and 2014/23:

1. as of June 2014, the amount of government deposits eligible for remuneration was capped at the higher of either €200 million or 0.04 per cent of GDP, and any amount in excess was remunerated at an interest rate of zero per cent or at the deposit facility rate (DFR), if negative;
2. as of 1 December 2014, overnight government deposits and time deposits were remunerated at a rate not exceeding the EONIA and EUREPO rates respectively. To comply with the new rules, a new agreement was signed on 23 December 2015 and transposed into law by a decree of the Minister of Economy and Finance dated 28 September 2017.

Subsequently, with regard to the remuneration of government deposits within the maximum eligible amount, the ECB replaced the EONIA rate with the Euro Short Term Rate (€STR) with Guideline 2019/7 and Decision 2019/8. For deposits exceeding the threshold, the remuneration rate was: (1) the lower of the €STR and the DFR, when either one was negative; (2) zero, when both rates were equal to or greater than zero.

The new criteria were endorsed by the agreement signed on 26 August 2022 and approved with a decree of the Minister of Economy and Finance dated 28 December 2022.

Between 14 September 2022 and 30 April 2023, the ceiling for the remuneration rate on deposits exceeding the threshold was temporarily removed with Decision ECB/2022/30. These deposits were remunerated at the lower of the DFR and the €STR, even when positive.

With Guidelines 2023/8 and 2024/1209 the ECB implemented a new remuneration framework effective as of 1 May 2023, removing the distinction between deposits below and above threshold, and setting the remuneration rate cap at €STR minus 20 basis points for the total amount of government deposits.

The new framework was incorporated in the update of the Convention signed on 26 August 2022.

With a view to the active and efficient management of the Treasury's cash holdings, and in light of the regulatory framework mentioned above, the Bank and the MEF share data and projections of inward and outward payments on a daily basis.

The MEF has recently introduced new ways to manage its own liquidity needs, including liquidity-raising and liquidity-lending reverse operations backed by Italian government securities.