Italian govt proposes Panetta as next Bank of Italy chief

By Giuseppe Fonte and Crispian Balmer

ROME (Reuters) -The Italian government has proposed Fabio Panetta, an executive board member of the European Central Bank, as the next governor of the Bank of Italy, two government sources said on Tuesday.

The current governor, Ignazio Visco, will remain in office until his mandate expires at the end of October, the sources said.

The government plays a key role in the appointment of the head of the Bank of Italy under a complicated procedure that requires consultation with the central bank's main internal body, and approval from the head of state.

The Bank of Italy's Superior Council approved Panetta's candidacy last week, a third source familiar with the matter said.

Panetta, 63, spent more than three decades at Italy's central bank and served as a deputy governor under Visco before he was promoted to the ECB's board in Frankfurt at the start of 2020.

He was widely expected to replace Visco, even though his term in Frankfurt was not due to end until the end of 2027.

He is viewed as a monetary dove, similar to Visco, who has been governor since 2011.

Panetta's move will open up a position on the 6-member ECB board, which has always included representatives of the three biggest economies in the euro zone -- Germany, France and Italy -- although there is no rule saying this must happen.

An ECB spokesperson declined to comment.

The third source said Piero Cipollone, who sits on the Bank of Italy's five-member executive board, was front runner to replace Panetta in Frankfurt.

Cipollone, who joined the Bank of Italy in 1993, has also worked for the World Bank and was an economic adviser to former Italian Prime Minister Giuseppe Conte in 2018-2019.

Bank of Italy governors play an influential role in the country's economic management and some have moved on to bigger jobs.

Carlo Azeglio Ciampi became prime minister then president in the 1990s after he left the central bank, while Mario Draghi became head of the European Central Bank and then prime minister until last year.

Panetta rejected an offer in 2022 to be finance minister in Prime Minister Giorgia Meloni's new right-wing government, but managed to maintain good ties with her administration.

(Reporting by Giuseppe Fonte, Angelo Amante and Gavin Jones in Rome, additional reporting by Koranyi Balazs in Frankfurt; Writing by Crispian Balmer; Editing by Sandra Maler)