Anti-Inflationary Commitment in the Post-Bretton Woods Era: Italy's Road to Stability-Oriented Monetary Policies, 1975–81

Abstract

This article focuses on the historical reasons, and the main political implications of Italy's anti-inflationary commitment between the mid-1970s and the early-1980s. This study examines the broader climate of opinion within which Italy's economic and monetary authorities – that is, the Bank of Italy – changed or adapted their main attitudes regarding the existence of high inflation rates throughout the 1970s and early 1980s in accordance with an emergent international (i.e. the European Monetary System) anti-inflationary consensus. This article first explores the main political and social steps of Italy's prioritization of anti-inflationary goals as they were envisaged by the central bank and its governmental interlocutors. Second, it retraces the run-up to the ‘divorce’ between the Bank of Italy and the Treasury in July 1981. Here the ‘divorce’ is conceptualized as a counter-reaction of specific strands of Italy's ruling class (namely those who revolved around the central bank) against the volatility of public finance performances and what was deemed as the seeming elusiveness of Italy's governmental parties regarding the need to restore the country's financial stability. Finally, this article reflects on the historical meaning of Italy's anti-inflationary commitment as part of the global emergence of stability-oriented monetary policies.