EU defends Italy cbank

New spat with Rome

BRUSSELS, Feb 12, (RTRS): European Commission Vice-President Valdis Dombrovskis called on Monday for the independence of financial supervisors to be preserved after the Italian government stepped up pressure on the country’s central bank.

Italy’s far-right Deputy Prime Minister Matteo Salvini said on Saturday that the management of the Bank of Italy and market watchdog Consob should be “completely cleared out” because of their failures to supervise banks properly.

The Bank of Italy is replacing three board members and the comments followed the departure in September of Mario Nava, head of the Italian market watchdog, following government pressure due to his ties to the EU Commission.

“It’s important to preserve the independence of the central bank and also of financial supervisory institutions,” Dombrovskis told reporters when asked if the Italian executive’s criticism of the country’s central bank set a dangerous precedent.

Dombrovskis, who is responsible for the euro in the EU executive commission, said the independence of those institutions was a core principle of the euro zone and its monetary union.

Arriving at a meeting of finance ministers in Brussels, he reminded Italy that its economic slowdown, with growth forecast by Brussels to be 0.2 percent this year, should prompt the government to maintain responsible fiscal policies.

Rome is targeting a deficit at 2 percent of gross domestic product this year mostly to cover higher spending on welfare and pensions.

This is considered likely to increase its public debt which stands above 130 percent of GDP, the largest ratio in the EU after bailed-out Greece.

Dombrovskis added that Rome’s initial budget plans, partly changed in December after EU pressure, had already damaged the country’s economy.

EU economics commissioner Pierre Moscovici said the economic slowdown should push the Italian government to react with reforms to boost productivity and revive growth.

He said the large downgrade of Italy’s growth forecast, which in November the commission expected to expand by 1.2 percent, would not revive discussions for a disciplinary procedure over the country’s budget which would expose Rome to higher market pressure.