Tommaso Padoa-Schioppa: Italian economist and politician who laid the groundwork for the euro
Friday 24 December 2010
Tommaso Padoa-Schioppa, economist and former Italian finance minister, was the intellectual architect of the European single currency, introduced in 1999. He was also a highly respected figure in international monetary policy-making and politics.
At a time when many Italians have criticised their Prime Minister, Silvio Berlusconi, for personal behaviour that has often landed him on the front pages, a commentator of the left-wing newspaper L'Unità wrote, "We have lost one of the few Italian faces that is presentable abroad."
Padoa-Schioppa was seen as a visionary; someone who was precise, articulate and liked to present his arguments in a painstakingly enumerated style. A fellow central banker remarked on his "extraordinary capacity to see both the wood and the trees at the same time, the big vision from the top down and the details from the bottom up."
Padoa-Schioppa helped lay the groundwork for the Euro single currency while serving as the European Commission's director of economic and financial affairs in Brussels, from 1979-83, arguing for the idea of European countries giving up their national currencies for a shared (single) one at a time when such an approach was not yet in vogue. He believed that "fully-fledged European monetary union is the high road to policy co-ordination and economic convergence." Thereafter, Padoa-Schioppa would go on to play a major part in the Euro roll-out.
Tommaso Padoa-Schioppa was born on 23 July 1940, in the mountain town of Belluno, in north-eastern Italy. Both his parents were intellectuals. His father, Fabio, whom he did not meet until after the war in 1945, was a teacher and later became a senior executive at the insurance company Assicurazioni Generali. In 1966, Padoa-Schioppa graduated with an economics degree from Bocconi University in Milan, before obtaining a Master's in economics from the Massachusetts Institute of Technology in Boston. In addition, he became fluent in German, French and English. He later remarked that he preferred to think and work in English "because it is more concise, more precise, more concrete."
His first job was with the German-Dutch retailer C&A Brenninkmeijer. In 1968, he joined the Bank of Italy and, after brief stints in Brussels, eventually became the vice director-general from 1984 to 1997. Although twice tipped for the governorship, it was outside Italy's central bank that Padoa-Schioppa achieved greatest distinction, when working as director-general at the European Commission in Brussels. Here he muted the idea of a single currency.
Six years later, when the EU adopted Economic and Monetary Union (EMU) as an objective, then EU president Jacques Delors made Padoa-Schioppa joint secretary of the Delors Committee, formed to investigate how EU countries could remove all common trade barriers by introducing a single currency. It published a three-stage blueprint for monetary union in April 1989, and helped draft the conclusions of the Rome summit of European leaders which endorsed the committee's work the following year. The plan was then enshrined in the 1992 Maastricht Treaty.
Padoa-Schioppa had described the British long-term negotiating strategy as "masterful", adding, "First they influenced the substance of the project so that it would be more suitable to them if they did want to sign up to it. Then they carve out a special status for themselves which means they don't have to sign up to it."
Subsequently, Padoa-Schioppa was involved in much of the detailed planning which brought into being, in 1994, the European Monetary Institute, followed by, in 1998, its successor institution, the European Central Bank (ECB) with Padoa-Schioppa, who served a seven-year term, as a founder member of its six-man executive board. Finally, on 1 January 1999, the Euro itself was introduced, at first in non-physical form and three years later in notes and coins. With the complexity and many pitfalls of the Euro introduction, he later admitted, at a low point during the market upheavals of autumn 1992, "most people thought the likelihood of us achieving monetary union was very low."
In addition to his EU work, Padoa-Schioppa was chairman of the Basel Committee on Banking Supervision (1993-97), and on retiring from the Bank of Italy he surprised many when he moved to Consob, as head of Italy's stock market watchdog. He then moved to the ECB in Frankfurt, where he stayed until 2005.
In 2006, Padoa-Schioppa again returned to Italy, this time to be economy and finance minister in Romano Prodi's newly elected centre-left government. During his tenure, he endeavoured to halt Italy's ballooning public debt and to introduce ambitious reforms to the country's distorted and unaffordable welfare system, which paid generous pensions but offered insufficient help to the young unemployed. He caused controversy by suggesting a plan to offer tax relief to what he called bamboccioni (literally "big babies", designating young men between their late teens and early thirties) to encourage them to leave home and find work rather than sponge off their parents. He then tried to make Italians pay their taxes – a somewhat controversial and subversive idea. In 2007, he notoriously described taxes as "una cosa bellissima" (a very nice or beautiful thing) because, he said, they were a civilised way of contributing to the common good. The following day, Il Giornale, the Berlusconi family newspaper, carried a cartoon on its front page showing Padoa-Schioppa in a straitjacket. There are many, on the left and right alike, who believe the sacrifices demanded by Padoa-Schioppa made an important contribution to Silvio Berlusconi's 2008 election victory. Padoa-Schioppa left office.
He was recently appointed to the board at carmaker Fiat and was giving his time freely as an adviser to Greece on how to deal with the country's debt mountain.
During the current economic crisis, with the likes of Greece and Ireland requiring a financial rescue from other member countries, pessimists have suggested that Spain and perhaps even Italy could go under. Padoa-Schioppa, however, was always optimistic, believing the "EU's history has always shown peaks and troughs" and describing the Euro as "a common element of strength." He compared EMU to the emu because "neither can go backwards." He believed the Euro was here to stay. Only time will tell.
Padoa-Schioppa died on 18 December, aged 70, after suffering a heart attack at a party in Rome.
Tommaso Padoa-Schioppa, banker, economist, politician: born Belluno, Italy 23 July 1940; married 1966 Fiorella Kostoris (divorced, three children); died Rome 18 December 2010.
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