## An Analysis of the Process of Capital Liberalization in Italy

_IMF Working Papers, April 1, 1992_

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**Canonical URL:** [An Analysis of the Process of Capital Liberalization in Italy](https://www.imf.org/en/publications/wp/issues/2016/12/30/an-analysis-of-the-process-of-capital-liberalization-in-italy-777)

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## Bibliographic details
- Authors: Gordon M. Bodnar, Leonardo Bartolini
- Published: April 1, 1992
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451844436.001

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### Background and scope
- Beginning in 1985 Italy embarked on a path of progressive removal of its system of controls on portfolio investment, a process formally completed with the abolition of all remaining restrictions in 1990.
- The paper reviews the policy of capital liberalization and integrates the analysis with an examination of the process of stabilization of the lira exchange rate in the 1980s.
- Subject coverage: Balance of payments, Capital controls, Capital flows, Capital inflows, Exchange rate stability, Exchange rates, Foreign exchange.

### Analytical approach and indicators used
- The study uses various indicators of capital controls’ effectiveness and target zone credibility.
- The indicators are employed to identify the temporal relations among:
  - capital liberalization,
  - exchange rate stabilization,
  - capital flows.

### Key findings and synthesis (as described in the source)
- Capital liberalization in Italy proceeded progressively from 1985 and was formally completed in 1990 with the abolition of all remaining restrictions on portfolio investment.
- The analysis integrates the timeline and dynamics of capital liberalization with the stabilization process of the lira exchange rate during the 1980s.
- Temporal relations among capital liberalization, exchange rate stabilization, and capital flows are identified using the selected indicators of controls’ effectiveness and target zone credibility.

### Keywords and technical terms preserved from the source
- capital control premium
- Capital controls
- Capital flows
- Capital inflows
- capital liberalization
- capital mobility
- exchange rate
- exchange rate expectation
- Exchange rate stability
- Exchange rates
- forward market
- interest rate differential
- liberalization of capital movement
- net capital
- WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/an-analysis-of-the-process-of-capital-liberalization-in-italy-777_