Italy names Mario Draghi as new central banker

ROME: Italy has named outsider Mario Draghi as the central bank's new governor, moving swiftly to contain the fallout from a banking scandal that caused his predecessor's resignation. 

The scandal has tainted the long-standing prestige of the Bank of Italy and damaged the country's image abroad. 

The nomination of Draghi, a respected figure with solid credentials, came during a Cabinet meeting Thursday.  

It won praise from ruling conservatives and center-left politicians, as well as from financial analysts. 

"He is well known and widely respected internationally and a very strong replacement for (Antonio) Fazio,'' said analyst Lorenzo Codogno, co-head of European economics at the Bank of America in London. 

Economy Minster Giulio Tremonti called Draghi's nomination "a result that we consider, and that I believe is considered in Italy and abroad, as strongly positive.'' 

The European Central Bank welcomed the appointment. 

"Mario Draghi has wide national and international experience and will contribute substantially to the work of the governing and general councils of the European Central Bank,'' ECB spokeswoman Regina Schueller said. 

Draghi was expected to start his job in February, with acting governor Vincenzo Desario in charge until then, according to Italian news reports.  

Tremonti declined to say when the new governor would take office. 

Earlier Thursday, the bank's high council gave its unanimous support to Draghi in a meeting. President Carlo Azeglio Ciampi, whose approval was the last step required, also signed off on the nomination later in the day. 

Draghi was chosen under new rules for the central bank pushed through by Premier Silvio Berlusconi's government after Fazio's resignation last week. 

The reform grew out of the banking scandal, seeking to limit the powers of the governor and increase power sharing. 

It reduces the governor's open-ended mandate to a six-year, once-renewable term, and transfers some of the central bank's regulatory powers to Italy's competition authority. 

It transfers the powers of appointment to the government. Previously, the Bank of Italy's high council, or its board of directors, appointed its chief. 

Draghi's appointment, along with the new rules, will help restore the credibility to the entire banking system, Codogno said. 

Fazio was accused of improperly favouring two Italian banks at the expense of foreign ones in two takeover battles over the summer.  

He came under investigation for market rigging and insider trading in connection with the takeovers, and eventually stepped down Dec. 19. 

The ex-governor, who had resisted calls for his resignation for months, has always denied wrongdoing. 

Draghi is no stranger to the top tiers of Italian finance but he brings an outsider's perspective to the job. 

His nomination marks the first time in nearly a half century that the Bank of Italy's top job has not been taken by a senior central bank official. 

Draghi was director general of the Italian Treasury from 1991 to 2001, where he headed Italy's privatization program after 1993. 

Previously, he was an executive director of the World Bank from 1984 until 1990, and served as an adviser to the Bank of Italy in 1990. - AP 

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