The Bank of Italy used its balance sheet as a de facto monetary policy instrument throughout the 20th century, according to new research.

In a paper published on July 24, the bank’s senior economist Massimiliano Affinito examines the evolution of its balance sheet from 1894, when the bank began operations, to 1998, the last year before the launch of the European Central Bank’s single monetary policy.

Using a range of vector autoregression models, Affinito finds that the Bank of Italy’s balance