The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
High household wealth is often cited as a key strength of the Italian economy. Both in
absolute terms and relative to income, the Italian household sector is wealthier than most
euro area peers. A sizable fraction of this wealth is held by the rich and upper middle classes.
This paper documents the changes in the Italian household sector's financial wealth over the
past two decades, by constructing the matrix of bilateral financial sectoral exposures.
Households became increasingly exposed to the financial sector, which in turn was exposed
to the highly indebted real and government sectors. The paper then simulates different
financial shocks to gauge the ability of the household sector to absorb losses. Simple
illustrative calculations are presented for a fall in the value of government bonds as well as
for bank bail-ins versus bailouts.