The Bank of Italy has released seven Occasional Papers examining the monetary, regulatory and market implications of artificial intelligence, tokenized money and changing financial risks, alongside studies of Italian public procurement and private capital. The research finds that AI driven productivity gains raise output but can increase or reduce inflation depending on the timing of supply and demand responses. Monetary policy performs better when it tracks changes in the natural rate of interest or responds more strongly to observed inflation rather than relying on the natural rate’s long term level. The paper on digital money argues that holder identification, redemption arrangements and settlement architecture matter more than the underlying technology. Non-bearer tokenized deposits remain compatible with the singleness of money, while electronic money tokens and bearer tokenized deposits can trade away from par. Bank-issued instruments in the latter two categories are economically similar and should receive consistent treatment for remuneration, prudential requirements and deposit guarantee coverage. Other research finds that tail risk repricing became a major driver of the USD/EUR exchange rate after the April 2025 U.S. tariff announcement, while the releases of DeepSeek R1 and Kimi K3 affected different parts of the AI value chain because only DeepSeek conveyed a sharp reduction in expected computing costs. The Italian procurement study finds that litigation affected only 0.4% of procedures in 2023-25 but 7.2% of their total value, extended award times by more than 35% and led contracting authorities to reduce procurement and use fewer open procedures, particularly where administrative capacity was weaker. Private equity and venture capital investment in Italy more than doubled between 2015 and 2025 to EUR 8 billion, though the market remained smaller than those of major European economies and relied heavily on public fundraising and foreign funds. A separate study finds that Italian and Dutch institutional investors reduced holdings of U.S. equities exposed to hurricanes, with Dutch pension funds also reallocating toward unaffected corporate bonds.
Bank of Italy releases seven Occasional Papers on AI, tokenized money and financial market risks
The Bank of Italy has released seven studies covering AI, tokenized money, exchange rates, public procurement, private capital and climate-related investment behavior. The papers find that AI’s inflation effects depend on supply and demand timing, while bearer tokenized money can create par-value and regulatory risks regardless of the underlying technology. Other findings highlight litigation-related procurement delays, Italy’s still-underdeveloped private capital market and institutional selling of hurricane-exposed U.S. equities.