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MNI SOURCES: New Drive To Boost Gov't Power Over Bank Of Italy

By Silvia Marchetti
     ROME(MNI) - Italy's parliament is expected to revive plans to strengthen
government powers over the Bank of Italy after the recent rescue of a regional
lender renewed criticism of the central bank's performance as a financial system
supervisor, party sources told MNI.
     Banca Bari's E900 million emergency government bailout in December has
prompted the Five-Star Movement, which shares Italy's coalition with the
centre-left Democratic Party, to try again with legislation to allow the
government to appoint members of the Bank of Italy's governing board and to make
the institution more accountable to parliament and the government, the sources
     Such an initiative had been promoted by Five-Star last year, but was
dropped after the populist movement fell out with its former coalition partners
in the far-right League in August.
     This time round Five-Star may muster enough votes to pass the bill, with
support from the small Italia Viva party led by former prime minister Matteo
Renzi, the sources said, noting that the Democrats may not back it.
     The reform bill would be sent to parliament once a committee to be
established to examine recent bank failures, whose presidency is expected to go
to Five-Star, has agreed on proposals to reform bank supervision, said sources.
One option could be to spin off the Bank of Italy's supervisory arm and make it
more accountable to parliament, said one of the sources, with ties to Renzi's
     Currently, governing board members are designated by the bank's governor
together with the board of directors, before approval by the Council of
Ministers and Italy's president. Under the proposal, the government's power to
appoint new governing board members would be subject only to approval by
     "The independence of the central bank doesn't mean it is above the law,"
said the Five-Stars source.
     Renzi has previously signalled support for an overhaul of the central bank.
He opposed the renewal of Governor Ignazio Visco's mandate in 2018, clashing
with then-premier Paolo Gentiloni before abandoning the Democrats and forming a
new party of his own.
     Another key priority could be to revisit the existing set of financial
crimes and weigh potential changes to the penal code, sources said.
     "There are certain behaviours, customs and practices within the financial
sectors that are crimes but are not coded as such", said the Five-Stars source.
     A government source, from the Democrats, said the reform proposal was too
"radical" and would equate to an attack on the central bank's independence,
sending out a negative message at a eurozone level.
     Fears for the Bank of Italy's independence are also shared within the
institution itself, according to people familiar with the thinking of officials
at the Bank.
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$E$$$,M$I$$$,M$X$$$,MT$$$$,MX$$$$]

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