Crisis and Reform: The 1893 Demise of Banca Romana

December 14, 2017

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Format: Chicago

Marco Pani. Crisis and Reform: The 1893 Demise of Banca Romana, (USA: International Monetary Fund, 2017) accessed December 24, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

More than a century later, the Banca Romana crisis still provides useful insights on the challenges of preserving financial stability. This paper reviews the case and discusses implications that can be relevant today. The crisis was spurred by an unsustainable credit expansion encouraged by capital inflows, which provoked an asset price bubble and other imbalances. A system of corruption and collusion with politicians and journalists enabled the bank managers to run risky and illegal operations – effectively, asset-stripping – undetected and unhindered. As a result, it would not have been easy for an observer not endowed with investigative powers to detect the mounting risks, while the government, which had these powers, failed to take action when needed and concealed critical information from the public. When the crisis erupted, its resolution was facilitated by a previous, decade-long debate on the reform of the banking system which had led to the exploration and development of possible solutions that could then be rapidly implemented.

Subject: Bank credit, Banking, Commercial banks, Credit booms, Currencies, Financial institutions, Loans, Monetary expansion, Monetary policy, Money

Keywords: Africa, Banca Romana, Bank, Bank supervision, Bank surveillance, Banking crisis, Commercial banks, Corruption, Credit booms, Currencies, Global, Government, Government inspector, Government intervention, Government supervision, Issuing bank, Issuing banks, Italy, Liquidity situation, Loans, Monetary expansion, WP

Publication Details

Pages:

62
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/274
Stock No:

WPIEA2017274
ISBN:

9781484332979
ISSN:

1018-5941

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