Italian central bank seeks credibility in Draghi appointment

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The Independent Online

Mario Draghi became the latest Goldman Sachs employee yesterday to land a high-profile job outside the bank. He was named the next governor of the Bank of Italy, replacing Antonio Fazio who resigned less than a fortnight ago over his allegedly improper role in takeover battles for Italian banks.

The appointment of Mr Draghi, a vice-chairman of Goldman Sachs International and an economist with broad experience of Italian finance and government, comes weeks after another Goldman employee, Paul Deighton, was named the first chief executive of London Organising Committee for the 2012 Olympic Games.

Goldman alumni can also count among their number a former BBC chairman, directors of some of the biggest companies in Europe and America, past and present members of the Bank of England's Monetary Policy Committee, a former US Treasury Secretary and a chief executive of the New York Stock Exchange.

Mr Draghi will be charged with repairing the central bank's tarnished reputation from a scandal that threatened to reach the highest levels of Italian Prime Minister Silvio Berlusconi's centre-right coalition. Mr Draghi's predecessor stepped down after it emerged he was under investigation by Milan prosecutors for suspected insider trading as part of a wider inquiry into allegations of rampant fraud at Banca Popolare Italiana. The affair led to passage of a law last week that ends the governor's job for life and hands the Italian government power to remove the head of its 123-year-old central bank.

The appointment was welcomed by business people, politicians and economists in Italy and elsewhere. The opposition leader Romano Prodi, a former president of the European Commission, said he would restore dignity to Italy's central bank.

Mr Draghi spent a decade from 1991 as director-general of the Italian treasury, overseeing a massive privatisation programme of the energy, banking and telecommunications sectors that reaped tens of billions of euros for the government. That gave Italy the ability to pay down spiralling public debt and join the eurozone at the launch of the single European currency in 1999.

Mr Draghi, who will start his new job in February, is thought to be more amenable to foreign takeovers of Italian banks than Mr Fazio, who was governor from 1993 onwards. He will also take a seat on the European Central Bank's governing council, where he will have a say on interest-rate policy across the eurozone.

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