How Credit Policy Ends: Central Bankers and the Rise and Fall of Credit Controls in Italy, 1973–1983

Since 2008, growing scepticism about the ability of market forces to ensure financial stability and environmental sustainability has revived interest in credit controls. Credit controls were common in Europe before the ‘neoliberal turn’ of the 1980s. However, the decline in support for these policies in the 1970s is not well understood. This article examines Italy's shift away from credit controls, focusing on the role of central bank economists and the Bank of Italy's monetary policy ideas. By analysing the discourse and research of central bankers from 1973 to 1983, the article shows that persistent fiscal deficits were the main driving force behind both the introduction and the subsequent abolition of credit controls. It also highlights the influence of a new generation of economists, such as Tommaso Padoa-Schioppa and Mario Monti, on Italian economic policy, providing a case study that contextualises the economic ideas shaping policy making in the European Monetary Union.