Selective credit policy: Italy’s recent experience

Abstract

In 1973 and 1974, a selective credit policy was introduced in Italy with two provisions: one prescribed fixed minimum purchases of securities for the banks, the other placed growth ceilings on certain categories of loans. This article does not judge Italy’s experience of selective controls, but rather seeks to explain some of the facts and concepts necessary in order to understand this phase in monetary policy. The author first looks at the indirect instruments of Italian monetary control and the distribution of credit. The effects of selective controls are then dealt with, including the advantages, the modus operandi and the criticisms. Finally, the measures taken in 1973-74 and their direct and indirect effects are considered.

JEL: E51, E52