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Bank of Italy enters regulation debate

ITALY – The Italian central bank, citing the US SEC, says market regulator Consob should be given greater powers.

Banca d’Italia governor Antonio Fazio told the senate that Consob should be given more power. He cited the example of the US Securities and Exchange Commission‘s gaining extra powers after corporate scandals.

The suggestion came as the governor faced the senate in the enquiry into the “relationship between corporate governance, the markets and the protection of savings”, a probe already attended by Consob. The pension fund regulator, Covip, is due to attend tomorrow.

Consob’s authority, Fazio said, “is exercised over the wide range of forces that make up the market” over which the market regulator has also controlling and inspecting powers.

The security of the savings entrusted to the public sector rests on “ an economic policy aimed at growth”, Fazio said in the testimony.

Savings entrusted to banks were protected by the stability of intermediaries and supervision while savings directly entrusted to companies relies on the probity of administrators and good working order of internal and external controls.

A reinforcement of internal and external controls in Italy – along the lines of the US – was “necessary”.

But Fazio reminded the Senate that the Federal Reserve’s role in matters of stability and competition in the credit markets had been “in no way under discussion”.

Concluding his deposition, the governor maintained that the bank guarantees the safety of savings though the strength of the bank system – and that the protection of savings was not separated from the acknowledgment of the role of institutions and their autonomy.

Fazio’s calls for a reinforcement of Consob’s powers comes as the Italian cabinet is poised to discuss the finance minister’s proposal to set up a new authority which would comprise the powers of the market and pension funds’ regulators, Consob and Covip.

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