ITALY NEWS

Bank of Italy Governor Antonio Fazio refuses to resign

Bank reform goes into effect but unwanted leader remains
(issue no. 15/2005 / September 8, 2005)

Several federal management reforms for the Bank of Italy were approved on Friday, September 2, which, among other things, limit the previously lifelong role of Bank Governor to only seven years.  Contrary to expectations, current Governor Antonio Fazio has not resigned.

 

In creating the measures, leaders were convinced that current Governor Antonio Fazio, who recently came under fire for favouritism of Italian banks during takeover competitions that had also included foreign banks, would resign of his own accord.

 

Economy Minister Domenico Siniscalco was outraged at Fazio’s lack of ethical sensibility and his unwillingness to help Bankitalia recuperate credibility in international financial circles. Governor Fazio, however, holds fast to his claim that he has done nothing illegal.

 

The reform package was originally to include the forced resignation of Governor Fazio, but avid support of Fazio from the conservative Northern League party blocked any direct attack on the governor’s role. Most centre-left as well as many centre-right leaders agree, however, that they would have preferred Fazio to step down voluntarily. Minister Siniscalco will most probably try to pass another measure to oust the governor.

 

The reforms also included measures for the central bank to comply with transparency principles. Bankitalia will now have to report to the government every six months, and there will eventually be a transfer of capital from private banks to the State.

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