The Italian Senate approves the 2026 budget bill, the gold ownership clause angers the European Central Bank.

The Italian Senate smoothly passed the 2026 budget, which focuses on reducing the fiscal deficit and also includes a controversial amendment on the ownership of the gold reserves that has sparked wide debate. On Tuesday local time, lawmakers in Rome voted in support of a plan centered on tax cuts for the middle class, bringing an end to weeks of intense debate on pension and central bank gold issues. However, for the budget to officially take effect, it still needs to be approved by the Chamber of Deputies before the end of the year. The bill is a key pillar of Italian Prime Minister Meloni's economic plan, which aims to implement tax cuts totaling about 9 billion euros (equivalent to 10.6 billion US dollars) over three years. Currently, the Italian government carries a debt burden exceeding 130% of GDP, the second-highest in Europe. In order to reduce this heavy debt burden, the government has had to make difficult trade-offs. Encouragingly, the deficit has already been reduced to within the EU's 3% limit. Although the budget is still expected to proceed as planned this month, in sharp contrast to France delaying related plans until 2026, intense political bickering during parliamentary deliberations has become a stumbling block to the budget's progress, highlighting the increasing challenges facing Prime Minister Meloni as she enters her fourth year in office. Most notably, an amendment explicitly stating that the Italian central bank's gold belongs to all citizens has sparked multiple rounds of exchanges between Rome and Frankfurt. Italy remains firm in its position, insisting that the statement is purely symbolic and has no substantive far-reaching impact, while the European Central Bank has issued warnings twice, pointing out that the measure seems unnecessary and could give the impression of harming the independence of the Italian central bank. The Bank of Italy currently holds around 2,453 tons of gold. However, critics point out that some supporters are attempting to use this massive gold reserve for fiscal purposes while public finances remain tight. Additionally, the banking sector has expressed deep concerns about the government's plan to increase the tax burden on lenders, stating that this may impact credit supply capacity; at the same time, the European Central Bank has commented that excessive one-time policy measures may create uncertainty. Meloni still maintains a strong majority in parliament, but a series of disputes surrounding the central bank, trade unions, and lending institutions have raised concerns - she may have to find a difficult balance between restraining spending impulses, maintaining fiscal order, and avoiding market and EU backlash before the 2027 election. In addition, the Prime Minister also faces the challenge of managing a complex coalition government. The alliance is composed of different factions of her own Brothers of Italy party as well as other coalition parties, with members often questioning the boundaries of central bank independence, adding many uncertainties to her leadership.