Italy's Senate's adoption of 2026 budget gold ownership provisions infuriates the ECB

The Zhitong Finance App learned that the Italian Senate successfully passed the 2026 budget. While focusing on curbing the fiscal deficit, the budget also included a widely disputed amendment to the ownership of gold reserves. On Tuesday local time, lawmakers in Rome voted for a plan with middle class tax cuts as the core content. The results of this vote put an end to weeks of intense debate over pensions and central bank gold issues. However, for the budget to officially take effect, it still needs to be passed by the House of Representatives before the end of the year.

The bill is a key pillar of Italian Prime Minister Meloni's economic plan, which plans to implement tax cuts of about 9 billion euros (equivalent to 10.6 billion US dollars) within three years. Currently, the Italian government is burdened with debt that accounts for more than 130% of GDP, which is the second largest in Europe. To reduce this heavy debt burden, the government has had to make difficult trade-offs. It is reassuring that the deficit has been reduced early to the 3% limit set by the European Union.

Although judging from the current situation, the budget is expected to proceed according to plan this month, which is in stark contrast to France's practice of delaying related plans until 2026. However, during the parliamentary review process, fierce political disputes became a stumbling block to the progress of the budget, which also highlighted the increasing challenges faced by Italian Prime Minister Meloni as he entered his fourth year in office.

Most notably, an amendment clearly stipulating that the Bank of Italy's gold belongs to all citizens has triggered multiple rounds of correspondence between Rome and Frankfurt.

The Italian side took a firm stand, insisting that the statement was only symbolic and had no substantial far-reaching impact; the ECB, on the other hand, issued two warnings, pointing out that the move seemed unnecessary and could leave a bad impression on the outside world that it would damage the independence of the Bank of Italy.

The Bank of Italy currently holds about 2,453 tons of gold. However, critics point out that some supporters are trying to divert this huge gold reserve into financial use at a time when public finances are still tight.

Furthermore, the banking industry has also expressed deep concern over the government's move to raise lenders' tax burdens, saying bluntly that this move may have an impact on credit supply capacity; at the same time, the ECB also expressed its opinion that too many one-off policy measures would create an element of uncertainty.

Meloni still maintains a solid majority in parliament, yet the series of disputes surrounding central banks, trade unions, and lenders are worrying — she may have to struggle to find a balance between curbing spending impulses and maintaining fiscal order before the 2027 general election to avoid triggering a counterreaction from the market and the EU.

In addition to this, the prime minister also faces the challenge of managing a complex ruling coalition. The coalition consists of different factions of her Italian fraternal party and coalition parties. Members within the coalition often question the border issue of the central bank's independence, which has undoubtedly added many variables to her administration.