« Back

Bocconi University publishes Lectio Paolo Baffi by Minister Giorgetti

giancarlo giorgetti
20/12/2025

Italy needs fiscal and monetary discipline to safeguard the value of savings and the currency. This is the conclusion of the working paper “Public Debt and the Euro: Rules and Economic Policies”, written by Giancarlo Giorgetti, Ministry of Economy and Finance, Italy and presented on 29th September 2025 at Bocconi University during the first Lectio Paolo Baffi. 

The lecture analyzes the relationship between public debt, monetary policy, and the institutional evolution of the euro area, focusing on Italy’s experience. Giorgetti argues that protecting the value of money and savings requires both monetary and fiscal discipline, produced through sound rules and responsible policies.

Giorgetti frames Italy’s modern economic history around four key milestones:

  1. 1981 – “The Divorce”

The Bank of Italy stopped being obliged to buy unsold government debt. This marked the end of fiscal dominance, in which governments freely monetized deficits, causing high inflation, debt growth, and monetary instability.

  1. 1997 – Entry into the Euro

Italy joined a system of monetary dominance, where an independent ECB focused on price stability, and direct monetary financing of government deficits was prohibited. Inflation fell sharply, interest rates stabilized, and fiscal consolidation improved.

  1. 2009–2020 – Period of “Illness”

The global financial crisis, eurozone debt crisis, and the COVID-19 pandemic triggered unprecedented monetary exceptionalism by the ECB (very low/negative rates, massive liquidity injections) and fiscal exceptionalism (large deficits and rising public debt). Italy’s debt rose to its fifth historical peak.

  1. The return to normalization (After 2020)

Post-pandemic inflation forced the ECB to tighten policy sharply. Italy’s fiscal situation improved somewhat, with a Debt/GDP ratio that fell from 154% (2020) to 135% (2024). Primary balance returned to surplus, but challenges remain substantial. Giorgetti ends his lecture by emphasizing:

  • The need for renewed fiscal discipline in Italy;
  • The importance of monetary stability as a public good;
  • The vital roles of institutional trust, policy coherence, and public understanding;
  • Education and academic debate as key to cultivating a “climate of opinion” that supports long-term responsibility in both fiscal and monetary policy.