Italian prime minister Giorgia Meloni's Brothers of Italy (FdI) has presented a bill to parliament which would radically alter the country’s banking sector by separating retail and investment banks.

The draft law comes after the collapse of US lender Silicon Valley Bank (SVB) and the government-led takeover of Credit Suisse by UBS, with mounting fears of further systemic stress on the global banking landscape.

Should it be approved, the law would give banks 12 months to reorganise their operations and choose between commercial or financial investment activities.

The bill, quietly introduced to the lower house of parliament earlier this month but only just spotted by Reuters, is sponsored by the head of FdI in the lower Chamber of Deputies, Tommaso Foti, and fourteen party colleagues.

It states that allowing retail banks to engage in “speculative trading” is "dramatically negative for the real economy and undermines the most elementary principles of safeguard for the social and ethical foundation of the economy.”

The far-right FdI proposed a similar law in 2018 while in opposition, but it failed to advance beyond committee stage and never reached the floor of the house.

While appearing a radical proposition in 2022, the majority of the 20th century saw banks in Italy operate under these rules, and would reintroduce legislation from the 1930s which was subsequently scrapped in the 1990s by deregulation reforms. Such reforms have been blamed by parties on both sides of the aisle for contributing to recent financial crises.

There have been similar calls in the US for reforms to reintroduce the 1933 Glass-Steagall Act which separated commercial and investment banking – though this has come from primarily left-wing voices like senator Elizabeth Warren as opposed to the fascist-sympathising Meloni.

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