Not just financial markets look set to be disappointed by the European Union weekend summitry, which has just started in Brussels. A big loser could be the European Central Bank.
The ECB was forced to reactivate its government bond buying programme in August after the eurozone leaders’ last attempt at crisis management – at a summit in July – backfired and the crisis spread to Italy and Spain. Then, the expectation was that the European Financial Stability Facility would become operational and able to takeover the ECB’s role in intervening in bond markets. Without an effective deal soon to enhance the EFSF, such hopes will be dashed.
Bank set for a grilling on QE2
Bank governor Sir Mervyn King and his deputy Charlie Bean, have been called before parliament’s Treasury Select Committee on Tuesday to explain why the MPC launched a fresh round of asset purchases this month.
Lorenzo Bini Smaghi’s hopes of winning the Banca d’Italia governorship have been quashed, even though at one point it had seemed the prize was within his grasp. So the thorny question remains: can he remain as an executive board member of the European Central Bank?
In Paris, the answer is clearly “Non”. Nicolas Sarkozy has piled pressure on Silvio Berlusconi, Italy’s prime minister, to find a new job for Mr Bini Smaghi.
Ignazio Visco. Image by Bank of Italy.
Few predicted Ignazio Visco, the Bank of Italy’s third-in-command, would succeed Mario Draghi as the central bank’s governor.
Mr Visco did not, like the other candidates, have a powerful cheerleader. And that he has secured the nomination owes something to his relative inoffensiveness to both Mr Draghi and Giulio Tremonti, Italy’s finance minister.
But he is no ugly compromise.
He was the most favoured choice for many within the bank. For good reason. Mr Visco can be trusted to uphold the values that have made the bank Italy’s most respected public institution under Mr Draghi’s stewardship.