Money Mover Country Report - Italy
Posted on the 10th January 2017 by Emily Keates in Country Reports
Since the official unification of Italy in 1861, the country has experienced a tumultuous period that saw a mass exodus of her people and the disastrous consequences of two World Wars. Yet over the past 60 years the country has reclaimed its status as a major social and cultural player in world affairs.
Italian goods and services have excellent international reputations, and Italy remains one of the most popular tourist destinations in Europe.
It has a population of just under 60 million.
The Euro
The lira was the currency of Italy between 1861 and 2002. Between 1999 and 2002, the Italian lira was officially a national subunit of the euro. However, cash payments could be made in lira only, as euro coins or notes were not yet available.
The lira was the official unit of currency in Italy until January 1, 1999, when it was replaced by the euro (euro coins and notes were not introduced until 2002). Old lira denominated currency ceased to be legal tender on February 28, 2002.
Political situation
Italy is a founding member of the European Union, the Eurozone, the OECD, the G7 and the G8 and has been a democratic republic since 2 June 1946, when the monarchy was abolished by popular referendum and political system is now conducted through a constitutional republic.
The executive power is exercised collectively by the Council of Ministers, which is led by the Prime Minister, officially referred to as President of the Council. Legislative power is vested in the two houses of parliament primarily, and secondarily on the Council of Ministers, which can introduce bills and holds the majority in the parliament. The judiciary is independent of the executive and the legislative branches. It is headed by the High Council of the Judiciary. The president is the head of state, though his position is separate from all branches.
In December 2016, the Italian Foreign Minister, Paolo Gentiloni, was chosen to replace Matteo Renzi as Prime Minister following the defeat of Renzi in a referendum on constitutional reforms.
Approximately 60% of Italians voted down the measure and Renzi had vowed to resign if he lost the vote.
The choice of Gentiloni signals continuity in the Centre-left government’s domestic and foreign politics at a volatile time for the Eurozone’s third-largest economy.
Trade and industry
Italy is the 3rd-largest national economy in the Eurozone and is the eighth largest exporter in the world with $514 billion exported in 2016.
Its closest trade ties are with the other countries of the European Union, with whom it conducts about 59% of its total trade. The largest trading partners, in order of market share, are Germany (12.6%), France (11.1%), United States (6.8%), Switzerland (5.7%), United Kingdom (4.7%), and Spain (4.4%).
In the post-war period, Italy was transformed from an agricultural based economy which had been severely affected by the consequences of the World Wars, into one of the world's most industrialized nations, and a leading country in world trade and exports. According to the Human Development Index, the country enjoys a very high standard of living, and has the world's 8th highest quality of life according to The Economist.
Despite these important achievements, the country's economy is still struggling. After strong GDP growth in 1945–1990, the last two decades' average annual growth rates lagged below the EU average; moreover, Italy was hit particularly hard by the late-2000s recession. The stagnation in economic growth, and the political efforts to revive it with massive government spending from the 1980s onwards, eventually produced a severe rise in public debt. In addition, Italian living standards have a considerable North–South divide: the average GDP per capita in Northern and Central Italy significantly exceeds the EU average, while some regions and provinces in Southern Italy are dramatically below.
AML & CTF (Anti-Money Laundering and Countering Terrorist Financing)
Italy is not on the FATF List of Countries that have been identified as having strategic AML deficiencies. The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Italy was undertaken by the Financial Action Task Force (FATF) in 2016. According to that Evaluation, Italy was deemed Compliant for 10 and Largely Compliant for 26 of the FATF 40 Recommendations.
Italy was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).
Key Findings from the report are as follows: -
Perceived Risks:
- Italy’s economy is the eighth-largest in the world and the third-largest in the Eurozone.
- Its financial and industrial sectors are diversified.
- The proceeds of domestic organized crime groups, especially the Camorra,the ‘Ndrangheta, and the Cosa Nostra, compose the main source of laundered funds.
- Numerous reports by Italian non-governmental organizations identify domestic organized crime as Italy’s largest enterprise.
In 2015, the Bank of Italy (BOI) said that suspicious bank transactions increased 10 percent to a record high as the pervasive problems of organized crime, corruption, and tax evasion were exacerbated by a three-year economic slump. The financial downturn has given cash-rich mafia groups the opportunity to tighten their grip on the economy. As banks reduce lending, the criminal networks simultaneously boost their investments into various economic sectors.
Corruption
The Corruption Perception Index 2015 ranks Italy 61 out of 168 countries and territories, with a score of 44 (0 being highly corrupt and 100 representing a very clean perception).
Political corruption is considered to be a major problem in Italy, particularly in parts of Southern Italy. Political parties are ranked as the most corrupt institution in Italy, closely followed by public officials and Parliament, according to Transparency International Global Corruption Barometer 2013.
Regarding business and corruption, foreign investments and economic growth are sometimes hindered by organised crime and corruption.
Money Mover view
We are happy to process Euro payments to Italy. Our customers may wish to use our international payments for reasons including:
- The need to make Euro payments to suppliers based in Italy.
- Or the need to make mortgage payments for a holiday home in Italy.
Other country reports you might be interested in:
- Money Mover Country Report - South Africa
- Money Mover Country Report - Spain
- The Challenges and Opportunities presented by Brexit