However, despite not suspending or reducing the import quotas, the merchandise account deficit declined only slightly in the following years. From 1954, the EPU granted special credits and arranged for bilateral repayments and amortisation agreements with third parties to enable Italian authorities to cope with the growing EPU deficit. Such deficit in EPU currencies was covered, for the most part, by the use of foreign exchange reserves and by settlements with the EPU in gold and dollars. Thus, the EPU settlements absorbed some of the foreign reserves assets acquired through trade and by other means from other monetary areas. The financial burden, which continued to be unfavourable in all currencies, was eased significantly by positive balances in invisible trade. Italy’s balance of payments equilibrium was thus maintained, thanks to the increasing contribu- tion of tourism and emigrants’ remittances throughout the 1950s.12 The EPU mechanism enabled the lira to progress steadily
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