Italy's probe into possible wrongdoing of central bank head casts light on fast-evolving institution

Bank of Italy governor Ignazio Visco is among eight officials named in an investigation into possible fraud and corruption in an ill-fated banking deal, casting new light on the operations of the 122-year-old institution whose role has changed dramatically since the introduction of the euro currency.

The probe involving Visco is relatively small, and the fact that he and the other officials were named by prosecutors in the Italian region of Umbria looking the circumstances surrounding the collapse of the Banca Popolare di Spoleto does not mean any of them will be charged with a crime.

But it is still an unwelcome development for the Bank of Italy, which has suffered from an image problem ever since the scandal surrounding then-Bank of Italy governor Antonio Fazio, who was forced to resign ten years ago. Fazio actively and illegally acted to block the takeover of an Italian bank by a foreign rival. As a result of that scandal, some of the Bank of Italy's regulatory powers were transferred to other agencies.

Before 1998, the Bank of Italy's main responsibility was overseeing the money supply for the Italian lira, through controlling the release of new currency or adjusting interest rates. But when the lira was first pegged to other European currencies in 1998 ahead of the introduction of the euro four years later, those powers were transferred to the European Central Bank.

A new country with no national currency would have no reason to create a central bank, but with the lira gone, the Bank of Italy's adjusted its role: it remains one of the main regulators overseeing the banking sector, it issues euro banknotes and takes worn out notes out of circulation, and it oversees the national payment system and credit assessment services, and provides some analysis services. The Bank of Italy also maintains the world's third largest gold reserves (behind the United States and Germany), with nearly 2,500 metric tons of the precious metal.

But according to Cesare Imbriani, a professor of law, philosophy, and economic studies at La Sapienza University in Rome, one of the Bank of Italy's main roles is an unwritten one.

"The Bank of Italy has always been a training ground for bright young banking officials and economists," Imbriani told Xinhua, pointing out that Mario Draghi, the current governor of the European Central Bank, is a former head of the Bank of Italy, where he held the role between Fazio's resignation and when he left Rome for Frankfurt in 2011 and was replaced by Visco.

Ruggero Bertelli, a banking professor at the University of Siena, said that that even with its changing role, the Bank of Italy remains essential to Italy.

"The Bank of Italy doesn't have one big role any longer; it has many key small roles," Bertelli said in an interview.