Bank of Italy Veteran in Frame to Be Draghi’s Finance Minister

(Bloomberg) -- The Bank of Italy’s Daniele Franco is emerging as a possible candidate to take over as the country’s next finance minister, as the race intensifies over who will be premier-designate Mario Draghi’s pick to start reviving the staggering economy.

Franco, director-general at the central bank, is one name that keeps popping up in reference to the Treasury job as Draghi draws up the list of names for his cabinet, which may be revealed later this week, according to officials who asked not to be named discussing confidential talks.

The race is still wide open, with ex-European Central Bank chief Draghi set to complete a second round of talks with political parties Tuesday evening. Draghi hasn’t shared his plans for the cabinet during the talks, the officials said.

Whoever takes over at the Treasury will have the weighty task of helping Draghi oversee the management and spending of Italy’s 209 billion-euro ($253 billion) share of the European Union’s recovery fund. Battered by the pandemic, the country’s economy shrank around 9% last year, while government debt is heading toward 160% of output.

Reporting Back

Draghi is expected to report back to President Sergio Mattarella later this week to update him on party support for his government and the make-up of his prospective administration. He’s also expected to pick a technocrat rather than a political figure for the finance job.

Franco, 67, would fit the bill given his experience at both the Treasury and the Bank of Italy. Franco could be expected to walk into the Treasury and get the engine running instantly, one of the officials said, starting work right away on shaping recovery fund spending and aid to businesses. At the Treasury, Franco oversaw monitoring of spending EU structural funds.

The ECB’s bond-buying program has kept a lid on borrowing costs so far but there are questions about how long that can be sustained. Franco has a solid relationship with Draghi, one official said, dating back to his time at the Bank of Italy when Draghi was governor.

There are other names in the race — including Draghi himself, who could decide to take over the Treasury in the interim with two deputies flanking him, or with a very strong director general, likely Alessandro Rivera, who’s currently serving in that role.

Other Names to Watch

Dario Scannapieco: Since 2007 vice president of the European Investment Bank, where Draghi was instrumental in his appointment. Scannapieco, 53, started working at the Treasury in his thirties, and has long been seen as wanting to return to a role in Rome. He had been aiming to head state-backed lender Cassa Depositi e Prestiti SpA, officials said.

Roberto Gualtieri: If Draghi goes for a political figure rather than a technocrat, the current finance minister could stay on. A Democratic Party member, the 54-year-old Gualtieri is a former member of the European Parliament and as finance minister he’s approved over 130 billion euros in stimulus to shield the economy from the coronavirus.

Lucrezia Reichlin: A professor of economics at the London Business School, she is the first woman to be head of research at the ECB, which she did during Jean-Claude Trichet’s tenure as head of the central bank. Reichlin, 66, was floated as a successor to Draghi after he left the Bank of Italy. Her research on monetary policy has focused on the ECB and the interaction between monetary policy and banks’ behavior.

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