ROME – Italy’s populist government launched an unprecedented attack on the country’s central bank over the weekend, saying its top brass should be replaced because it had failed to supervise effectively the country’s troubled banking sector.
The leaders of Italy’s governing coalition, Matteo Salvini of the nativist League party and Luigi Di Maio of the anti-establishment 5 Star Movement, lambasted the management of the Bank of Italy for failing to avert the collapse of a number of banks, which resulted in losses for shareholders and some bondholders, including tens of thousands of mom-and-pop savers.
The government can’t impose new management on the independent Bank of Italy. But it can withhold approval for the bank’s own senior appointments, creating the potential for an institutional standoff. The mandate of one of the bank’s deputy governors expires on Monday.
“We are here because those who were supposed to supervise didn’t supervise,” Salvini told a meeting on Saturday of investors in Banca Popolare di Vicenza, which was liquidated in 2017.
Salvini also accused Italy’s stock-market regulator, Consob, of having failed to supervise the sale of shares and bonds to small investors. He called for a “reset” of both institutions.
The Bank of Italy and Consob declined to comment.
The move is the latest clash between the League and 5 Star Movement and Italy’s establishment, including civil servants, mainstream media and centrist politicians, whom the now-dominant populist coalition accuse of having failed Italy, the Dow Jones report added.
The government, in power since last June, also has verbally assaulted establishment politicians and technocrats abroad, from European Union authorities and the French government to the International Monetary Fund.
The coalition parties recently criticized the Bank of Italy for making more pessimist economic forecasts than the government’s own.
Antipathy to the Bank of Italy is one issue on which Messrs. Salvini and Di Maio can agree. The pair have been at loggerheads on some other issues recently, including infrastructure investments, migration and the degree of autonomy of Italian regions.
“We cannot think of reappointing the same people who have been at the top of the Bank of Italy, if we think of what happened in these years,” Di Maio told the investors’ meeting.
Critics accused the government of trying to threaten the Bank of Italy’s independence.
“It’s part of a strategy I would summarize in this way: buying the referee,” former Prime Minister Enrico Letta, one of the founders of the centrist Italian Democratic Party, said in an interview with daily newspaper La Repubblica.
Last Friday, the Bank of Italy said it had proposed the reappointment of deputy Governor Luigi Federico Signorini, whose mandates expires on Monday, for a second six-year term.
Under the Bank of Italy’s rules, the central bank chooses its own top appointees. But the government must endorse the bank’s nominee. Final approval rests with Italian President Sergio Mattarella – a respected figure in Italy’s establishment and another bête noire of the League and 5 Star Movement.