Kingdom of Italy's external borrowing and domestic monetary policy between the two world wars

Abstract

The article discusses Italy's integration into the international capital market following the First World War. Abundant inflows of foreign capital subsequently clashed with the stringent monetary policy that accompanied the Lira revaluation and consequently were partially sterilised. During the aftermath of the world crisis, foreign funds withdrew from Italian firms as a consequence of the precarious equilibrium in which the gold bloc countries found themselves, once other currencies devalued or became prone to devaluation. The resulting isolation from the world financial market raised the need for a domestic solution to the liquidity crisis, and the creations of IMI and IRI are viewed as part of the resultant process of the Italian credit system's overall restructuring.