Why Governments Cannot Seize Central Bank Gold

There must be something particularly alluring about the gold of the Bank of Italy. Over the past two decades, three different governments have tried ways to transfer it to the Treasury. 

In December 2005, the centre-right government led by Silvio Berlusconi, with Giulio Tremonti as finance minister, enacted a law aiming precisely at that. It was never implemented and was eventually repealed in 2013. 

A similar proposal resurfaced in the spring of 2019 under Prime Minister Giuseppe Conte and Finance Minister Giovanni Tria. It, too, stalled—helped by the government’s collapse that summer. 

The latest attempt comes through a parliamentary amendment to the 2026 budget bill. It calls for transferring to the Treasury the roughly 2,500 tonnes of gold held by the Bank of Italy, worth more than €250 billion at current valuations. 

The justification advanced by supporters is simple: gold belongs to the nation, and the government should therefore be free to use it at will—potentially selling part of the reserves to finance public spending. 

Even if Parliament were to pass the amendment, its fate would likely mirror that of the 2005 law. It would never be implemented and, after a few years, quietly repealed. The political embarrassment would merely be postponed. 

The core issue is not that such a measure contradicts European treaties—although it does, particularly the provisions governing the euro and the Eurosystem of central banks. Rather, the proposal lacks basic economic logic. 

Gold is one component of a central bank’s balance sheet, alongside other financial assets such as international reserves, securities purchased for monetary policy operations and various credit claims. 

Against these assets stand monetary liabilities: banknotes in circulation, liabilities of the banking sector and—since the creation of the euro—liabilities to the Eurosystem. 

Removing part of the assets without simultaneously assuming the corresponding liabilities would create a loss. 

In the case of the Bank of Italy’s gold, that loss would amount to roughly 20 per cent of total assets—exceeding the bank’s entire capital. 

This would constitute outright expropriation, with devastating consequences for the credibility of the currency. Unless the Treasury were to purchase the gold at market value—in which case the result would entail an increase of the public debt, of roughly 10 per cent of GDP. The economic rationale becomes even harder to discern. 

In short, the proposal is devoid of logic, irrespective of whether Italy is part of the monetary union. Unsurprisingly, no advanced country has ever attempted such an operation. 

Within the European legal framework, it would also be impossible. The Treaty stipulates that the European System of Central Banks, of which the Bank of Italy is a member, is responsible for holding and managing member states’ official reserves—including gold—against which the euro’s monetary base has been created. 

Because the currency is shared and circulates throughout the entire euro area, the corresponding liabilities fall under the exclusive issuance authority of the European Central Bank. Only the ECB may determine how its balance sheet—both assets, including gold, and liabilities—is managed. 

None of this concerns the legal ownership of the gold, which depends on the institutional set-up of each central bank—a point clarified repeatedly by the ECB in its legal opinions. 

If a central bank is publicly owned, or treated as such—as in the case of Italy—and pays taxes to the national Treasury, the assets on its balance sheet may be considered part of the state’s patrimony. But they are administered by the central bank, against monetary liabilities that circulate across the euro area. 

In essence, the Bank of Italy’s gold already belongs to the Italian state—just like its foreign-currency reserves. No law is needed to establish this. 

What governments cannot do, however, is dispose of individual balance-sheet items at will—gold included. They cannot decide to sell it, nor can they tax unrealised capital gains, as a few creative fiscal minds have occasionally suggested. 

The proposal to transfer the Bank of Italy’s gold is therefore not only unworkable but also pointless. It hardly seems to bring good luck, either. 

Worse, it risks damaging the country’s credibility, especially if it signals difficulties in keeping the public finances on track. 

A first version of this article was published in the Italian daily Il Foglio