Banca d'Italia and the birth of the Italian Republic

1 June 2026

This year marks the 80th anniversary of the institutional referendum held in Italy on June 2–3, 1946, which marked a pivotal moment in Italian history: the birth of the Republic.

This event set in motion a political and social renewal of Italy, which had been left utterly exhausted by two decades of Fascist rule and a devastating war. Restoring a democratic institutional framework, based on the Republic and the Constitution that came into force in 1948, was the starting point for the country's civil and economic rebirth. That political and institutional turning point was followed by an intense process of economic recovery and physical reconstruction.

Social and economic conditions at the end of the war were nothing short of dire. Real household spending had fallen by about 40 per cent in 1945 compared with the prewar period, and the value of industrial production had dropped by two thirds. The ration card system guaranteed just 900 calories per day for every Italian.

The return to democracy allowed Banca d'Italia to regain its autonomy and institutional normality, laying the foundations for Banca d'Italia - led by Luigi Einaudi since January 1945 - to contribute fully to the country's reconstruction. The first and most important challenge was monetary stabilization and the fight against inflation. Prices had already risen more than twentyfold between 1938 and 1945 and, starting in the spring of 1946, a new surge in inflation had caused the cost of living to double within twelve months. The monetary stabilization measures conceived and implemented by Einaudi and the Director General (and future Governor) Donato Menichella were decisive in managing expectations and in rapidly curbing the surge in inflation. Monetary policy had regained credibility.

Only with this restored monetary stability could Italy be reintegrated into the international economic and financial community. As Governor Panetta noted in his Concluding Remarks delivered on May 29: 'Joining the post-war global multilateral architecture and participating as a founding member in the European project were essential conditions for the extraordinary economic development in the decades to follow'.

Thanks to its prestige, Banca d'Italia was involved in the crucial tasks of attracting and managing international aid - Interim Aid, Marshall Plan funds and World Bank loans - which made it possible to overcome the economic emergency and launch the reconstruction process.

This paved the way for the exceptional growth in the 1950s and 1960s, during which Italy's per capita income grew by about six times in real terms at a time of low inflation. This achievement is also significant by  international standards: before the war, Italy's per capita income was less than half that of the main Western European economies; by the early 1970s, it had reached levels comparable to those of France, the United Kingdom and Germany.

The birth of the Republic was thus the starting point for the country's civil and economic revival. Monetary stability, guaranteed by the actions of Banca d'Italia and its renewed autonomy, gave post-war Italy the foundations upon which to prosper.

For further information, please refer to the institutional content and publications in Banca d'Italia's Historical Series, as listed below:

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