Italian Prime Minister Giorgia Meloni’s party has introduced a bill in parliament to separate retail banks from investment banks, a move that if approved would force a sweeping overhaul of the country’s banking sector.
The proposal by the Brothers of Italy (FdI) party comes after the bankruptcy of the US technology bank Silicon Valley Bank (SVB) and the emergency takeover of Credit Suisse by its rival UBS, which raised fears of systemic tensions that could lead to more bank failures.
The bill, seen by Reuters, would give banks 12 months to reorganize their operations and choose between business activities and financial investment.
Introduced quietly in the lower house of Parliament on March 17, the bill is sponsored by the head of the FdI in the lower house, Tommaso Foti, and 14 members of his party, including former Economy Minister Giulio Tremonti.
FdI proposed an almost identical law in 2018, when the party was in opposition and with Meloni as the main sponsor of the project, but it did not pass the commission phase and never reached the full House for approval.
“We believe that the issue deserves attention and therefore we have decided to resubmit the bill,” Foti told Reuters.
“Meloni’s office was not informed of the legislative proposal, since parliamentary initiatives are different from government ones,” said Foti, who is confident that the bill can prosper.
Nor has the office responded to a request for comment on the government’s view of the bill.
The revision would de facto reintroduce legislation from the 1930s, scrapped in the 1990s by deregulatory reforms that some politicians on the left and right blame for contributing to recent financial crises.
Allowing retail banks to carry out “speculative operations” is “dramatically negative for the real economy and undermines the most elementary principles of safeguarding the social and ethical foundations of the economy,” the FdI bill mentions.
In the United States, calls for similar reforms, with the reintroduction of the 1933 Glass-Steagall Act that separated commercial and investment banking before World War II, have come from leftists within the Democratic Party, such as Senator Elizabeth Warren.
