The years from 1919 to 1935 constitute a variegated and complex period for the economic history of Italy. In the years following the armistice, the heavy legacy of the war weighed on monetary policy: the disruption of public finance, the difficult reconversion of the industries, and the related banking crises. The difficulties were heightened by the lack of financial support from the Allied countries; the instability of monetary and real variables, the depreciation of the exchange rate, and inflation followed.
Once the imbalances of the real economy were overcome, the stabilization started in 1926 allowed to set the new gold standard of the lira at the end of 1927. The functions of the Bank of Italy were extended and its autonomy strengthened with the reforms of 1926 and 1928. As the economy, not without struggle, began to adapt to the new regime, the global crisis burst. The stubborn maintenance of the gold standard, even when the pound first, and the dollar then abandoned the system, imposed a long-deflationist policy. The Bank of Italy was asked to reconcile the massive creation of liquidity linked to the bailouts of the "universal" banks with the government goal of continuing with deflation, which was interrupted only when the needs for new war adventures demanded it.
