Italy’s Populist Government Takes Aim at Central Bank

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 Wall Street Journal reported. The leaders of Italy’s governing coalition, Matteo Salvini of the nativist League party and Luigi Di Maio of the antiestablishment 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,” Mr. Salvini told a meeting on Saturday of investors in Banca Popolare di Vicenza, which was liquidated in 2017. The Bank of Italy is a member of the European Central Bank, which sets monetary policy for the 19-country euro currency zone as well as supervising its banking sector. Read more

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