A European Credit Council? Lessons from the History of Italian Central Banking after World War II

Abstract By formulating a proposal for the “democratisation” of the ECB through the establishment of a European Credit Council, Eric Monnet makes a fundamental contribution to the contemporary debate on central banking. This idea appears to be in line with other critiques that often see the post-World War II institutional set-up as a model to be revived to bring central banks back to democracy after the neoliberal disengagement of the 1980s. However, I argue in this article that the intellectual optimism with which these historical experiences are often viewed can be misleading. Going beyond the French “ideal type” and focusing instead on the “twin case” of Italy, I intend to show how the attempt to democratically control the central bank has not always been linear nor necessarily democratic and successful. The establishment of a credit council did not prevent the Bank of Italy from enjoying a high degree of independence and ability to influence policy. At the same time, the widespread system of credit policy that the central bank has explicitly promoted in pursuit of the country’s development agenda has often degenerated into irrational and opaque practices, revealing the side effects of an economy in which a sustainable boundary between fiscal and monetary policy struggles to emerge. While the Italian experience might show how problematic and “fictitious” the relationship between the credit council and the central bank can be, it can also offer interesting insights for a better articulation of it.