Two weeks ago, somewhat out of the blue, ECB President Mario Draghi issued an odd statement and large foreign currency holdings.
Specifically, Draghi made this statement to two Italian members of the European Parliament.
At the time it did not seem notable for any reason other than its peculiar timing, but now things are starting to make more sense as The Wall Street Journal reports that .
Complaining that hundreds of thousands of small individual investors lost billions of dollars after several Italian banks failed in recent years, the anti-establishment '5 Star Movement' and the nationalist 'League', depict the central bank as a symbol of a technocratic elite aloof from the needs of ordinary Italians.
“We need a change of course at the Bank of Italy if we think about what happened in the last years,” said Deputy Prime Minister Luigi Di Maio, leader of the 5 Star Movement.
Five Star and the League have repeatedly attacked the Bank of Italy for not preventing the banking crises, and blamed it for the losses suffered by mom-and-pop savers who had bought bank shares and bonds.
“If you are here with your current account in the red, it’s because the people who were supposed to control things didn’t do so,” League’s leader, Interior Minister Matteo Salvini, told a group of former investors in Banca Popolare di Vicenza, which was liquidated in 2017.
As The Wall Street Journal notes, such a move could in theory widen the scope for selling the gold and reduce the bank’s reserves, which help underpin the financial system...
“The gold belongs to the Italians, not to the bankers,” said Giorgia Meloni, leader of the Brothers of Italy, a far-right opposition party that supports both bills. “We are ready to battle everywhere in Italy and to bring Italians to the streets if necessary.”
The establishment sees it differently, warning that their actions are an attempt to undermine the Bank of Italy’s independence, and to spend the nation’s gold reserves on populist policies.