The Bank of Italy released eight Occasional Papers examining how artificial intelligence may reshape monetary policy, the structure and vulnerabilities of Italy’s financial system, post-pandemic household consumption and saving, and the effects of mergers and acquisitions. The studies are research assessments rather than policy decisions and draw on granular supervisory, survey and firm-level data. The AI paper finds that widespread adoption could weaken the overall transmission of policy rates through credit markets while accelerating their effects on lending, financial markets and inflation. It could lower banks’ demand for central bank reserves in normal conditions but intensify operational, cyber and liquidity risks during stress. Separate studies of Italian banks, insurers and investment funds find a bank-centered but increasingly cross-sectoral network, with cross-sector links rising to about 70% of connections in 2025 from 58% in 2019. Italian government bonds are the main common exposure, while the network’s sparse but short-path structure could allow shocks to spread quickly. A related survey argues that system-wide stress tests need to capture feedback loops involving fire sales, funding and margin pressures, common holdings and interactions between banks and non-bank financial institutions. The household studies find that the euro-area saving rate reached 15% of disposable income in 2025, about 3 percentage points above its pre-pandemic average. Higher interest rates, inflation-driven losses in real financial wealth and weak confidence explain part of the increase, but not all of it. Survey evidence associates a standard deviation increase in income uncertainty with about a 0.5 percentage point rise in saving and a 4.5% decline in nominal consumption, with stronger effects for lower-income and liquidity-constrained households and for downside income risk. Italian consumption data show that macroeconomic shocks mainly affect discretionary spending, with discretionary services responding more slowly and persistently than goods to monetary tightening. The mergers study records about 6,000 Italian transactions annually from 2014 to 2024 and estimates that, over the five years after a transaction, consolidated firms had 4% lower employment and 5% lower turnover than the counterfactual, partly reflecting restructuring and business disposals.
Bank of Italy2026-07-28
Bank of Italy releases eight studies on AI, financial contagion, household saving and mergers
The Bank of Italy released eight studies covering AI and monetary policy, financial interconnectedness, household saving and mergers. The research finds that AI could make monetary transmission faster but weaker through credit, while Italy’s increasingly cross-sectoral financial network could transmit shocks rapidly. It also links elevated household saving to rates, real wealth losses and income uncertainty, and estimates that post-merger employment and turnover undershot their counterfactual paths.