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

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Italy will try to maintain its influence on 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 close to the decision said Cipollone was the Italian government’s favoured candidate to replace Fabio Panetta, the ECB executive board member who is set to become Bank of Italy head later this year.

However, he is yet to be formally nominated by Italy’s finance minister Giancarlo Giorgetti. Other eurozone member states could also put forward their own candidates, despite a convention that each of the eurozone’s four big economies is granted one seat on the ECB’s six-strong board.

A successful nomination would maintain votes for two Italians — Cipollone and Panetta — on the ECB’s interest rate-setting governing council, although its 26 members are meant to put their nationalities aside and act in the interests of the overall eurozone.

Italy’s prime minister Giorgia Meloni has frequently attacked the central bank’s moves to rapidly raise borrowing costs, saying last month its “simplistic” approach to combating inflation was likely to hurt European economies more than help them. Panetta, meanwhile, is considered to be one of the more dovish members of the current council, favouring a more cautious approach to raising rates.

Analysts view Cipollone — one of four deputy governors at the Italian central bank — as a solid candidate, although one senior Italian financier said he was “uninspiring” and little known outside the Bank of Italy.

Panetta’s exit deprives the ECB’s six-person executive board of one of only three members with economics training, making it key 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 in the balance of payments office after joining the Italian central bank in 1993 and later taken charge of its directorate general for currency circulation and accounting. This could be valuable as Panetta’s successor is likely to take over his role overseeing the ECB’s plan to launch a digital euro.

Italy has also clashed with Brussels, however, over plans to allow local merchants to refuse digital payments for transactions under €60, which were eventually scrapped last year.

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

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

There could also be pressure from the European parliament for a woman to be appointed to improve diversity on the ECB governing council, which includes the 20 national central bank governors and where 24 of its 26 members are men. The parliament and 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 Invalsi education research institute and then became the World Bank executive overseeing Italy, Albania, Greece, Malta, Portugal, San Marino and Timor-Leste and chair of its audit committee. He rejoined the central bank in 2014 but spent a year as economic adviser to former prime minister Giuseppe Conte until September 2019.

The vacancy at the eurozone’s interest rate-setting authority was opened by the decision to move Panetta from the ECB board to Rome when Ignazio Visco’s mandate expires at the start of November. The Italian government and the ECB declined to comment.

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