Rome turns to Bank of Italy veteran to retain seat on ECB board

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Italy will seek to retain its influence over European Central Bank affairs by proposing Piero Cipollone, a senior Bank of Italy official, as its candidate to join the eurozone’s top monetary decision-making body.

Three sources familiar with the decision said Cipollone was the Italian government’s preferred candidate to replace ECB executive board member Fabio Panetta, who is set to head the Bank of Italy later this year.

However, he is yet to be formally nominated by Italy’s Finance Minister Giancarlo Giorgetti. Other eurozone member states may also put forward candidates of their own, despite a tradition that each of the eurozone’s four largest economies is given a seat on the ECB’s six-strong board.

A successful nomination would retain votes for two Italians – Cipollone and Panetta – on the ECB’s interest rate-setting Governing Council, although its 26 members are meant to put aside their nationalities and act in the interests of the eurozone as a whole.

Italy’s Prime Minister Giorgia Meloni, who has frequently attacked the central bank’s moves to sharply raise borrowing costs, said last month that its “simple” approach to tackling inflation was likely to do more harm than help to European economies. Meanwhile, Panetta is considered one of the more modest members of the current council, favoring a more cautious approach to raising rates.

analysts believe cipollone – one of four deputy governors of the Italian central bank – as a solid candidate, although a senior Italian financier said he was “disinterested” and little known outside the Bank of Italy.

Panetta’s departure leaves the ECB’s six-member executive board as one of only three members with economics training, making it important for his replacement to have such a background. Cipollone ticks this box, having studied economics at La Sapienza University in Rome and Stanford University in California before being a visiting scholar at the University of California, Berkeley.

Cipollone also has experience in payments, having worked at the Balance of Payments Office after joining the Italian central bank in 1993 and later taking over its Directorate General for Currency Circulation and Accounting. This could be valuable as Panetta’s successor could take on a role in overseeing the ECB’s plans to launch a digital euro.

However, Italy has also clashed with Brussels over a plan to allow local merchants to refuse digital payments for transactions of less than €60, which was eventually scrapped last year.

Some think Italy may still face a challenge from one of the smaller eurozone countries that has never had a top executive at the Frankfurt-based institution. Spain remained without a seat on the ECB board for six years until Luis de Guindos was made vice-chairman in 2018.

“Cipollone is a good economist who has a much broader knowledge of more than just monetary policy,” said Lorenzo Codogno, a former senior Italian treasury official who is now an economic consultant in London. “He can do an excellent job at ECB. Still, it depends on who the other candidates are and whether Italy will be allowed to fill the spot.

There could also be pressure from the European Parliament to appoint a woman to improve diversity on the ECB Governing Council, which includes 20 national central bank governors and where 24 of its 26 members are men. Parliament and the ECB have to be consulted on any appointment, which requires approval by EU leaders.

After leaving the Italian central bank in 2007, Cipollone joined the Invalci Education Research Institute and then became a World Bank executive overseeing Italy, Albania, Greece, Malta, Portugal, San Marino and Timor-Leste and chairman of its audit committee. He re-joined the central bank in 2014 but spent a year until September 2019 as an economic advisor to former prime minister Giuseppe Conte.

The vacancy in the eurozone’s interest rate-setting authority was opened by the decision to move Pennetta from the ECB board to Rome when Ignazio Visco’s term ended in early November. The Italian government and the ECB declined to comment.

Additional reporting by Sam Fleming in Brussels and Amy Kazmin in Rome