Italy‘s Gold Reserves Rise with Global Uncertainty
Italy is benefiting from the recent surge in gold prices, with its reserves revalued to approximately 253 billion euros at current market rates – a 55 billion euro increase from the end of 2024 valuation of 198 billion euros. This boost to Bankitalia’s balance sheet strengthens the financial stability of both the Institute and the broader italian economic system.
The notable portion of Italy’s gold reserves held abroad is a direct outcome of post-World War II security concerns. Following the war, there was a palpable fear that the Soviet Union, occupying Italian territory, might seize control of the nation’s gold. This prompted a strategic decision, mirrored by Germany, to disperse the reserves internationally. Ancient precedent underscores these anxieties; in 1943, the Nazis transported 120 tons of italian gold to Germany, of which 25 tons were never recovered.Recent geopolitical events, particularly the conflict in Ukraine, have re-emphasized the importance of mitigating such risks.
Bankitalia deliberately increased its gold holdings in the decades following the war. Emerging from WWII with only 20 tons of reserves, the Bank had amassed 1,400 tons by 1960, and continued to accumulate gold throughout periods of high inflation and declining confidence in the lira on international markets. This strategy was intended to project financial strength and stability.
However, the situation differs within the Eurozone. While the combined gold reserves of the 20 central banks within the Eurosystem total approximately 10,260 tons – exceeding the 8,133 tons held by the Federal Reserve – these reserves remain nationally controlled. The European Central Bank (ECB) itself holds a comparatively modest 506.52 tons. It’s considered unlikely that national central banks, such as Germany’s Bundesbank (which has actively repatriated gold from the US), would relinquish their reserves to the ECB.
This lack of unified gold backing presents a challenge for the euro. While China is actively building its gold reserves to bolster confidence in the yuan, the euro remains a major world currency without full gold coverage, currently representing around 20% of global currency reserves compared to the dollar’s 58%.
The article suggests that the ECB could significantly strengthen the euro by actively purchasing gold with funds generated from maturing government and corporate bonds (approximately 400 billion euros through quantitative easing in the first eight months of the year). Such a move would send a powerful signal to the world, demonstrating a commitment to backing the euro with tangible assets and positioning it as a more competitive alternative to the dollar. This shift would represent a “quality jump” for the ECB, moving beyond reliance on financial assets and counterparty risk.
