10 - Conclusions

Summary

In this chapter we intend to draw general conclusions and lessons that emanate from our History. Six themes emerge from our work, themes which are not entirely unique to the Italian experience. Space and knowledge prevent us from pointing to similarities and dissimilarities between Italy and other countries. So, as a next best solution, we invite the economic historian and monetary economist of other countries to make the appropriate comparisons.

First theme: What is money?

At the time of political unification, people had a preference for money in the form of gold and silver coins. Paper notes were imperfect substitutes for metal coins. There were historical and political reasons for this relative distrust of paper money. Paper money was a newcomer to the market, making money holders reluctant to use it. The negative ‘network’ effect was reinforced by a deep suspicion that paper money was more prone to depreciation than gold or silver. Confidence in paper money derives from confidence in those institutions and governments that directly affect the purchasing power of money. The political history of Italy, with its century-old regional turmoil, did not inspire in money holders the trust necessary to make paper notes perfectly equivalent to metal coins.

The several banks of issue did not have a nation-wide branch network; consequently, their liabilities were regarded with some suspicion outside their local markets. It was only after Italy's exit from the gold standard that paper notes, both those issued by the government and those by the banks, gained wider acceptance. Similarly, bank deposits were very undeveloped at the time of political unification.