Italy, 1982: The Case for Ecu-denominated Treasury Bonds

In 1982 Italy issued ecu-denominated Treasury bonds: the first of a series of issues – followed by Spain, Greece, and France only in the second half of the 1980s – officially aiming at contributing to reduce inflation and ease trading agents with foreign payments. In fact, it was much more than this. It was a small but significant signal that an economic elite was committed to curbing ever-demanding and opaque political pressures to increase public spending and trade-unions to raise wages, both deemed as crucial flaws to be fixed before international competitiveness could be restored. It represented one building block of a wider strategy concerning the use of the external constraint in domestic policymaking and in the attempt to increase the role of Italy in the making of European integration. The paper aims to reconstruct the interconnections between the events that accompanied such choice and the theoretical and intellectual background of the group of key economists that implemented this strategy.