Italy risked an institutional crisis today as central bank governor Antonio Fazio defied calls for his resignation over a takeover scandal.
The embattled Bank of Italy head lost his last bastions of support yesterday when both Prime Minister Silvio Berlusconi and the leader of the coalition party closest to the governor withheld their backing.
But Mr Fazio, who has an open-ended mandate and does not respond directly to the government, refused to budge.
A bank spokesperson said Mr Fazio planned to attend a meeting of European Union finance ministers in England later this week despite the uproar in Italy.
Mr Berlusconi, who had refused to move against the powerful central bank governor, yesterday switched tack and lent his tacit support to Economy Minister Domenico Siniscalco, who has threatened to launch a procedure to try to oust Mr Fazio.
Such a move would provoke an unprecedented institutional clash and could put Italy on a collision course with the European Central Bank, which has said that any rush to replace Mr Fazio could compromise the independence of the central bank.
Mr Fazio has denied accusations he favoured local bidders in a cross-border takeover battle in which he should have been impartial referee.
The governor (68) has repeatedly defended his behaviour in the takeover battle involving Dutch ABN Amro, but the scandal surrounding Mr Fazio's decision to approve a local bidder has tarnished the central bank and Italy's image.
