Similarly, if central bank lending facilitates exit by the uninsured depositors of a troubled bank, the costs borne by remaining creditors or the deposit insurance fund will increase.
In 1981, while Tommaso was serving with the European Commission, an epoch-making regime shift took place, to which he had contributed directly and indirectly: the so-called “divorce” between the Bank of Italy and the Treasury. The Bank ceased to act as residual buyer at Treasury bill auctions, the fundamental first step towards full independence for the Bank’s monetary policy decisions.