Tabellini Is the Right Man for Banca d’Italia

The succession to Mario Draghi, the newly appointed Governor of the ECB, for the top job at the Bank of Italy is becoming ground for a divisive and bitter institutional conflict in Italy.  There are currently three potential candidates, two of which are considered “insiders” and one “outsider”. The first insider is Vittorio Grilli. He was a Professor of Economics at Yale and at Birkbeck College in London, he then turned civil servant and is today the Director General of the Treasury. Critics argue that, Grilli, who is strongly supported by Minister Tremonti, is “too close for comfort” to politics, and may not sufficiently guarantee the independence of the Bank of Italy. The other insider is Fabrizio Saccomanni, Bankitalia’s Director General, and the Head of the Banking Surveillance department, a very sensitive job.  Saccomanni is widely recognized as competent and experienced, but according to his critics, may lack an “international standing”.  The ‘”outsider” candidate is  Lorenzo Bini Smaghi, the Italian representative on the Board of the European Central Bank. He will soon resign from the job, in order to make room for Draghi (and for a French man on the Board), and has (apparently) been promised another position of prestige. His critics argue that his unwavering defense of the ECB’s current bail-out approach to Greece has been “overboard”,  and ill- founded.

This dead lock on candidates could be easily broken. It would be sufficient for  Italy to learn from countries which take the prestige of their institutions seriously,  and where the most suitable persons are given the top jobs. Ben Bernanke, a professor at Princeton, at the Fed;  Mervyn King, a professor at the London School of Economics, at the Bank of England; Stanley Fischer, of MIT, at the Bank of Israel. The most famous Italian economist among those who persist in teaching in the  country, is Guido Tabellini, the present Rector of Bocconi University. Appreciated worldwide for his work on political economy, Tabellini is one of the few Italian economists who could reasonably aspire to the Nobel Prize in Economics, together with his co-authors Persson and Alesina. It would be the best possible choice for the Bank of Italy: the right man, at the right place, at the right time. If only Italy were a “right” country…