Italy’s populists attack central bank and regulator

Strains within coalition as campaigning ramps up ahead of EU elections

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Italy’s coalition government is in sharp disagreement over protecting the independence of the Bank of Italy, after senior politicians threatened to remove its leadership. Matteo Salvini, head of the anti-immigrant League party, said the central bank and Consob, the country’s stock market regulator, should be “reduced to zero, more than changing one or two people” and that “fraudsters” who inflicted losses on Italian savers should “end up in prison for a long time”. The comments drew a strong response from Giovanni Tria, Italy’s economy minister, who said on Sunday that independence of the Bank of Italy “must be defended”. Luigi Di Maio, leader of the anti-establishment Five Star Movement, had also criticised central bankers alongside Mr Salvini over the weekend, speaking to an audience of former stakeholders in two rescued Italian banks.

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“We cannot think of confirming the same people who were in the directorate of the Bank of Italy if we think of everything that has happened in recent years,” Mr Di Maio said. The coalition’s targeting of the Bank of Italy comes after central bankers issued more pessimistic economic growth forecasts for this year compared with the numbers underpinning the government’s budget.

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Data last month confirmed that Italy entered into a technical recession in the second half of last year, with the Bank of Italy cutting its prediction of economic growth for 2019 to 0.6 per cent compared with a 1 per cent forecast made by the government. Mario Draghi, president of the European Central Bank and a former governor of the Bank of Italy, last year warned that central bank independence was under threat by populist governments, while not making a direct reference to Italy.

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Mr Di Maio and other Five Star ministers have said they want to block Luigi Federico Signorini, the deputy director-general of the Bank of Italy, from renewing his term, according to a report in La Repubblica. The newspaper reported that the Italian cabinet was divided on the issue. Earlier this month the government nominated Paolo Savona, who had previously served as minister for European affairs, as the new president of Consob. Mr Savona, a Eurosceptic veteran economist, had last year been blocked as the coalition’s first choice as economy minister by Italian president Sergio Mattarella. The coalition partners have also ramped up anti-establishment rhetoric as they prepare to run against each other in the European parliamentary elections in May, a contest widely seen as a proxy for national polls. Both Mr Salvini and Mr Di Maio have also increased their attacks against targets including the EU and French president Emmanuel Macron. In recent weeks, the League and Five Star have openly squabbled over the future of an Alpine rail line and migration, while the two leaders’ repeated attacks against France have triggered a diplomatic crisis that last week saw Paris recall its ambassador from Rome.

 

 

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