Claudio Borghi

Claudio Borghi, chairman of Budget, Treasury and Planning within the Chamber of Deputies. Image courtesy of YouTube.

The European Central Bank has given tentative approval to the Italian coalition government for it to amend the official terms of ownership with regards Italy’s national gold reserves.

The ECB cautiously permitted the Italian government to proceed with its changes on Tuesday, though stated its expectations that the government consults with the Bank of Italy over any changes, for the sake of full transparency and in order to respect the independence of the central bank.

At present, la Banca d’Italia is the official owner of Italy’s 2,451.8 tonnes of gold bullion. The right-wing Lega party (one half of Italy’s coalition government) is keen to amend the law to clearly state that the bank holds the gold specifically on behalf of the Italian state.

The ECB is concerned by the phrase “an exclusive title of deposit”, which the European bank feels could be a hindrance to the Italian central bank regarding its access to the gold reserves and its responsibilities with regards international treaty compliance. The ECB also opined that the gold reserves must not be transferred from Banca d’Italia to the state’s own balance sheet.

Claudio Borghi, Lega’s economic minister, tabled the bill in February. At the time there was much criticism from opposition parties, with many Italian MPs suggesting that this transfer was on the cards, and that the coalition wanted to sell gold as a quick fix to Italy’s financial difficulties. This fear wasn’t helped by the Five Star founder, Beppe Grillo, blogging last September about how Italy could follow in France’s footsteps and sell a chunk of the gold reserves off to cancel out the need for higher taxes or VAT. Borghi denied these claims, and stated that the clarification was purely a correction in the legal documentation of the state’s ownership.

The Five Star/Lega Nord coalition both saw sharp increases in vote share at the last general election, leading to their partnership over the shared values of being anti-establishment, within which falls heavy criticism of the European Union and the European Central Bank. These changes to the gold reserve holding rules are unsurprising, but the tensions between the coalition and the central bank could cause headaches in the future if this situation isn’t managed carefully.