ABSTRACT
This chapter discusses about a marked difference between the Italian governments of the early Renaissance: the means of financing their deficit. In late medieval Western Europe some differences came to light, characterizing the system of indebtedness of urban communities. The chapter examines the main features characterizing the two mechanisms of indebtedness and the implications concerning the emergence of a true financial market connected with state bonds. Bonds were used in many ways, as the social base of citizens involved in the system enlarged and the size of government indebtedness grew. Buying and selling was extremely important on the local credit market, favouring diffused speculative behavior. This conduct involved mainly medium and large creditors. Credits were used to pay taxes, so as to allow governments to withdraw a share of the debt by means of taxes. The presence of state credits became more and more consistent in the assets of noble families and of religious and charitable institutions.
