The Bank of Italy is preparing far-reaching proposals for internal reform after embarrassing disclosures about the behaviour of Antonio Fazio, the central bank's governor.
Among the possible reforms are a fixed term of office for the governor, who now serves an open-ended term, and new decision-making procedures that would make it impossible for the governor to dominate the three other members of the bank's board.
The proposals are expected to be discussed later this month at a meeting of a powerful government financial committee, which Mr Fazio is due to attend.
The pressure for reform has been prompted by two banking takeover battles in which Mr Fazio, who regulates Italy's banking sector, has been accused by his critics of favouring Italian bidders over foreign competitors.
Opposition politicians say Mr Fazio's behaviour has brought the Bank of Italy into disrepute and that he should resign. Even some of his supporters in the ruling coalition's parties have distanced themselves from him this week.
Guido Crosetto, a politician who specialises in financial matters and represents Forza Italia, the government's biggest party, said Mr Fazio would have to resign if there were proof that he had favoured Banca Popolare Italiana in its bid for Banca Antonveneta purely because of his personal friendship with Gianpiero Fiorani, BPI's suspended chief executive.
The pressure on Mr Fazio to step down has never been more intense, yet the governor, who has served since 1993, has given no hint that he might do so. Officially, the Bank of Italy insists that it has done nothing wrong in the takeover sagas.
Although the centre-right government lacks the authority to dismiss Mr Fazio, it has made clear that it expects the Bank of Italy to propose internal reforms, or else the government will take action in September.
Even if the Bank of Italy, government and opposition agree that the governor should serve a fixed term, probably of eight years, it is unclear how that would apply to Mr Fazio and whether he would have a period of grace before stepping down.
It is also uncertain whether the Bank of Italy would accept another proposal, backed by the opposition and by some pro-government legislators, for super- vision of banking competition to be transferred to the national antitrust authority.
BPI said this week that it was keeping its options open in the battle for Antonveneta. After a board meeting, it also confirmed a number of senior operational appointments.
