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Unlike much of the past 15 years, euro strength is on the ECB's side as it meets on Thursday. Indeed, ECB President Christine Lagarde and chief economist Philip Lane littered speeches with warning shots about an excessive euro strength when the euro last snarled up to this extent in October 2020. Lagarde's predecessors Mario Draghi and Jean-Claude Trichet similarly weighed in with verbal intervention to cool periodic 10% surges in the trade-weighted euro over its history. Euro strength has built on belated ECB interest rate hikes since July - up some 350 basis points to 3.0% so far and expected to go up at least another 25 bps this week. So should euro strength be finally embraced by ECB as way of slaying the inflation beast?

☆ Italy signed up to China's Belt and Road Initiative. Now it's having second thoughts
▼ + stars: | 2023-05-01 | by ( Silvia Amaro | ) www.cnbc.com time to read: +2 min

At the time, analysts said that by joining the project, Italy was undermining Europe's ability to stand up to Beijing. Two years down the line and with a new government in place, Rome is now having another think about its ties with China. China sees Taiwan as a breakaway province, while Taiwan sees itself as separate from China, having ruled itself since splitting from the mainland in 1949 following a protracted civil war. If Italy chooses closer ties to Taiwan that will surely jeopardize its relations with China. "I believe they might not decide anything," Menegazzi said, suggesting the Italian government will continue its Belt and Road participation for now.

☆ On Inflation, Wages and Tough-Guy Economics - The New York Times
▼ + stars: | 2023-04-28 | by ( Paul Krugman | ) www.nytimes.com time to read: +2 min

Some economics textbooks used to define their subject as the “science of scarcity.” Maybe some still do. Still, a fair bit of economics does involve explaining limits and constraints — for example, that you can’t sustain a Denmark-style system of social benefits without something like Denmark-style tax rates. But accepting the need for hard choices can turn into a kind of trap itself. Many economists, even among progressives, use wage growth as an important indicator of “underlying” inflation (although that’s a slippery concept, as I wrote earlier this week). You need, however, to be careful not to suggest — as Andrew Bailey, the governor of the Bank of England, did — that greedy workers are the villains behind inflation.

☆ Powerful Swiss central bank faces reform calls in wake of Credit Suisse rescue
▼ + stars: | 2023-04-28 | by ( John Revill | ) www.reuters.com time to read: +6 min

[1/2] The Swiss National Bank (SNB) building is seen near the Limmat river in Zurich, Switzerland March 23, 2023. The governance concerns have been brought centre-stage by the search for a new member to replace Andrea Maechler, the first woman to serve on the SNB's governing board. The Swiss parliament would have to approve any expansion of the SNB's board. Still, the SNB Observatory, a group of economists set up to stimulate a debate about the SNB, has suggested that the small committee meant the central bank was susceptible to group think. Thomas Stucki, a former head of asset management at the SNB, said it was typical for central bank chairmen to dominate decision-making.

They are among the discordant calls made by Spanish and EU bureaucrats as Spain's drive to hand out 77 billion euros ($84 billion) in grants from EU pandemic recovery funds becomes mired in complexity, according to interviews with business associations, government officials, companies and consultants. Spain is the EU pilot project for disbursing grants from the largest stimulus package in the bloc's history, an overall pot of 724 billion euros, including loans. A year into the disbursement process, about 23.5 billion euros had been awarded as of December last year, according to the latest figures published by the government last month. That's a sluggish pace, given the EU and Spain have set a deadline of the end of this year to award all 77 billion euros. Meanwhile, only about 9 billion euros have actually reached the businesses awarded funds, according to calculations by the Esade Centre for Economic Policy, a Madrid-based think-tank that tracks the pandemic recovery cash.

The most surprising appointment was that of the new Enel chief Flavio Cattaneo, a seasoned corporate manager who leaves his role as vice president of high-speed train operator Italo to lead the country's biggest utility. He leap-frogged Stefano Donnarumma, the current chief executive of power grid Terna (TRN.MI), widely seen as Meloni's first choice. Enel shares were down 4% on Thursday, with investors fretting over Cattaneo's lack of expertise in the renewable energy sector. Leading politicians in Meloni's right-wing coalition said this issue was a major stumbling block for Donnarumma, along with pressure from League chief Salvini, a strong supporter of Cattaneo. Besides concessions on Enel, Meloni kept a tight grip on the rest of the main appointments.

☆ A top tip for central banks: talk less, smile more
▼ + stars: | 2023-04-11 | by ( Ben Winck | ) www.reuters.com time to read: +8 min

WASHINGTON, April 11 (Reuters Breakingviews) - Investors hang on central bankers’ every word, hoping to gain an edge for their next trade. But with consumer prices rising at the fastest pace in decades, central bankers can’t easily cut borrowing costs, either. Chatty central banks are a relatively new phenomenon. Investors are also more sensitive to central banks today than in years past. Still, being more careful about what’s said, and how it’s said, could help central banks better balance their priorities.

The 19-billion-euro tranche is related to the 55 targets and milestones in Italy's pandemic Recovery Plan that were supposed to be reached in the second half of last year. The extra time means Italy has now until the end of April to persuade Brussels to release the funds, a government source told Reuters. Rome has so far secured almost 67 billion euros of the roughly 200 billion it is due to receive through 2026, dependent on it achieving Brussels' policy prescriptions. Rome is eligible for a further 34 billion euros in 2023, split into two tranches, provided it can meet all 96 objectives set for this year. The initial timetable set out in 2021 envisaged spending more than 40 billion euros of them by 2022, but this goal was repeatedly revised down and was most recently set at around 20 billion euros.

Two government officials told Reuters the government was concerned about the deal because Nebius's activities were funded by Yandex. A third, separate source said Nebius is part of Yandex's Dutch holding company, Yandex NV, and would be part of the new international company post-restructuring. "They were basically told that as long as they're connected to a Russian company, it's not going to work," one of the sources told Reuters. "Our Dutch holding company is in the process of divesting its Russian business – unfortunately this isn't a fast process," Shtan said. Energy issued a statement last month saying neither the company nor its chief executive, Michael Bobrov, has any connection with Russia.

☆ Factbox: What can the ECB do to stop the banking crisis?
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +3 min

Here's a look at the European Central Bank's "toolbox", which has been expanded over the past 15 years in response to the global financial crisis of 2008, the ensuing euro zone debt crisis and the COVID-19 pandemic. LONG-TERM LOANSThe ECB can reactivate its Targeted Longer-Term Refinancing Operations (TLTRO), offering banks multi-year loans at low interest rates. Banks continued repaying their existing loans last week despite the Credit Suisse crisis. But the ECB has also been reducing this form of money printing to raise the cost of credit. Unveiled at the height of the euro zone financial crisis by then ECB President Mario Draghi, the scheme quashed speculation of a break-up of the currency bloc but never came close to being used.

A reversal of low rates to stem rampant inflation has forced a risk rethink and exposed the vulnerability of firms such as Credit Suisse. Meanwhile, Credit Suisse still needs to push ahead with a radical restructuring it undertook in October to restore profitability. [1/2] The Credit Suisse logo adorns one of their buildings at their campus in Research Triangle Park in Morrisville, North Carolina, U.S., March 15, 2023. "Credit Suisse has been in our watch-list for a while," one senior executive told Reuters. The radical move by the Swiss central bank is aimed at banishing such doubts.

CDP has teamed up with Australian infrastructure fund Macquarie (MQG.AX) in the offer for Italy's most important telecommunications infrastructure, which would compete with one submitted by U.S. investment firm KKR (KKR.N). In recent weeks, sources have told Reuters that CDP and Macquarie were ready to value TIM's grid at around 18 billion euros ($19 billion), including some 6 billion euros of debt. An offer from CDP and Macquarie leaves several scenarios open, two government officials said, without elaborating. Besides owning 10% of TIM, CDP controls fibre optic rival Open Fiber. Meloni's predecessors, Mario Draghi and Giuseppe Conte, have both backed plans to combine TIM's and Open Fiber's grids.

☆ Italy working on measures to boost Milan bourse's allure
▼ + stars: | 2023-02-20 | by ( Giuseppe Fonte | ) www.reuters.com time to read: +3 min

With an overall capitalisation of around 680 billion euros ($726.3 billion), the value of companies listed on Milan's bourse lags far behind European Union peers. "We aim to present a bill in parliament by April to strengthen Milan's ability to encourage listing," Treasury junior minister Federico Freni told Reuters. To boost initial public offerings (IPOs) in Milan, the draft bill includes measures to simplify the listing process, which current rules companies say make it costly and cumbersome to provide adequate risk disclosure for investors. "SME qualification is currently envisaged when capitalisation does not exceed 500 million euros: such a threshold would be increased to 1 billion euros," the draft showed. This would make only the institution liable while shielding its employees including top executives, a move the Treasury believes could speed up the listing process.

☆ Italian fund buys stake in asset manager Anima in play on bank M&A
▼ + stars: | 2023-02-15 | by ( Valentina Za | ) www.reuters.com time to read: +3 min

The 109 million euro ($116 million) stakebuilding strengthens the grip of Italian investors on a company in which France's Amundi (AMUN.PA) - Europe's biggest asset manager - has also taken a stake. Amundi has a strong presence in Italy having spent 3.6 billion euros in 2017 to buy peer Pioneer from UniCredit (CRDI.MI). Formerly backed by the state and focused on promoting national champions, private equity fund Fondo Strategico Italiano (FSI) targeted a stake of up to 9%. Amundi acquired its Anima stake a month after Amundi's owner, French bank Credit Agricole (CAGR.PA), bought 9.2% of Banco BPM, becoming its single largest investor. Of Anima's 177 billion euros of assets under management, some 100 billion euros are invested in Italian government bonds.

☆ Financial investor buying up to 9% of Italian asset manager Anima
▼ + stars: | 2023-02-14 | by ( Valentina Za | ) www.reuters.com time to read: +2 min

An investor document seen by Reuters showed Mediobanca, which did not name the investor, was buying Anima shares through an accelerated reverse bookbuilding at 4.35 euros a share. At the top of the targeted range, the investment would total 135.7 million euros ($145.7 million) while the minimum stake would cost the buyer 105.7 million euros, Reuters calculations showed. The investor is Italian and is neither a bank nor an insurance firm, two people with knowledge of the matter told Reuters. Anima is Italy's biggest independent asset manager and has often been seen as a potential takeover target. Last year, French asset manager Amundi (AMUN.PA) emerged as the third-biggest investor in Anima with a 5.2% stake.

☆ At BOJ's helm, MIT-educated Ueda to put theory into practice
▼ + stars: | 2023-02-14 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

At MIT, he studied economics under Stanley Fischer, whose students include former U.S. Federal Reserve chair Ben Bernanke and former European Central Bank President Mario Draghi. He is a good listener and a consensus-builder, rather than a leader with a strong view on the direction of monetary policy, they say. "His style is to discuss monetary policy based on facts and evidence," said Tetsuya Inoue, who was Ueda's staff secretary when he was a central bank board member. In a column published in July, Ueda warned against raising rates prematurely in response to cost-push inflation - a sign he would be in no rush to tighten monetary policy. Upon approval by parliament, Ueda will assume the top BOJ post on April 9 and chair his first policy-setting meeting on April 27-28.

☆ Italy's Meloni says France risks undermining EU unity on Ukraine
▼ + stars: | 2023-02-10 | by ( ) www.reuters.com time to read: +3 min

BRUSSELS, Feb 10 (Reuters) - Italian Prime Minister Giorgia Meloni on Friday accused France of jeopardising EU unity on Ukraine by organising a Franco-German dinner in Paris with the Ukrainian president that excluded other European allies. "What was right was the photo of Zelenskiy with the 27 (EU leaders). "It is not easy for any of us to handle the Ukraine issue with public opinion. "Obviously I would have preferred him to be there," Meloni told reporters after the two-day EU summit. Reporting by Crispian Balmer and Alvise Armellini, Editing by Federico Maccioni and William MacleanOur Standards: The Thomson Reuters Trust Principles.

☆ Italy bristles over Zelenskiy dinner snub in Paris
▼ + stars: | 2023-02-09 | by ( ) www.reuters.com time to read: +3 min

[1/2] Italy's Prime Minister Giorgia Meloni speaks to the media as she attends the European leaders summit in Brussels, Belgium February 9, 2023. REUTERS/Yves HermanBRUSSELS, Feb 9 (Reuters) - Italian Prime Minister Giorgia Meloni criticised France and Germany on Thursday after she was not invited to a dinner in Paris with Ukrainian President Volodymyr Zelenskiy, adding to friction between the European Union allies. French President Emmanuel Macron and German Chancellor Olaf Scholz met Zelenskiy on Wednesday evening ahead of an EU summit on Thursday. But unlike last year, when the then-Italian Prime Minister Mario Draghi worked hand-in-hand with Macron and Scholz on Ukraine, Meloni was left out in the cold. However, things were different when Draghi, a former president of the European Central Bank, was prime minister.

☆ Analysis: Italy's Meloni belies radical image in cautious first 100 days
▼ + stars: | 2023-01-26 | by ( Crispian Balmer | ) www.reuters.com time to read: +6 min

But almost 100 days since Meloni took office at the head of the most right-wing government Italy has seen since World War Two, these concerns have largely melted away. "We have seen something of a metamorphosis," said Sofia Ventura, a political science professor at Bologna University. Friend and foe alike say a significant reason for the softly-softly approach is money -- or rather a lack of it. "What happened in the UK shows ... how cautious we have to be with our fiscal and monetary policy mix," EU Commissioner Paolo Gentiloni, a former Italian prime minister, said at the time. VITAL FUNDSAdding to the pressure on Meloni is Italy's dependence on the European Union's recovery and resilience fund.

"That would be a problem for any central bank." TUG OF WARLagarde's commitment also puzzled ECB-watchers because the central bank had previously said it wouldn't make such public predictions - known as forward guidance - anymore, but instead take each decision based on incoming data. This of course leads to a tug of war between the ECB and the markets on the narrative," he added. ING's Brzeski said the ECB lacked a clear thought-leader on its Governing Council who could steer markets like Lagarde's predecessor, Mario Draghi. "The cacophony of diverging voices and the lack of clarity on who is the leading voice keeps hurting the ECB," Brzeski said.

☆ Italy set to appoint veteran economist Barbieri as new Treasury head
▼ + stars: | 2023-01-19 | by ( Giuseppe Fonte | ) www.reuters.com time to read: +3 min

SummarySummary Companies Barbieri to replace Rivera, who failed to win over MeloniPrevious Treasury chiefs include former PM DraghiBureaucrats in Italy get substantial say in policy-makingROME, Jan 19 (Reuters) - Italy's government is set to appoint veteran economist Riccardo Barbieri as director general of the Treasury, replacing Alessandro Rivera in the influential position, the economy ministry said on Thursday. The move marks a victory for newly installed Prime Minister Giorgia Meloni, who was looking to remove Rivera and put her stamp on key positions. "A cosmopolitan former banker and chief economist, Barbieri is one of the Treasury senior officials who liaises more frequently with Brussels," said Francesco Galietti, head of political risk consultancy Policy Sonar. MPS is 64%-owned by the Treasury following a 2017 bailout that cost taxpayers 5.4 billion euros ($5.8 billion). Rivera spent much of his career within the economy ministry, specialised in the handling of banking and financial crises.

☆ Exclusive: ECB union says staff losing faith in leadership over inflation, pay
▼ + stars: | 2023-01-18 | by ( Francesco Canepa | ) www.reuters.com time to read: +5 min

The responses underline that even central banks, whose primary responsibility is fighting inflation, are not immune to staff dissatisfaction with the sharply rising cost of living. Results of IPSO's survey, which largely focused on pay and remote-working arrangements but also included questions about trust in the board, were sent to ECB staff on Tuesday in an email, seen by Reuters. INFLATION SURGE, PAY BATTLESThe survey was the first by IPSO to ask about trust in top management since Christine Lagarde took over as ECB President in late 2019. The most recent Bank of England staff survey, also conducted in 2019, showed 64% of respondents had "trust and confidence in the Bank's leadership". "The ECB might be preaching lower real wages, but this is not our stance as your staff union," it wrote in its message to ECB employees.

☆ Exclusive: ECB staff losing faith in leadership as inflation bites, survey shows
▼ + stars: | 2023-01-17 | by ( Francesco Canepa | ) www.reuters.com time to read: +4 min

Results were sent to ECB staff on Tuesday in an email, seen by Reuters. An ECB spokesperson did not comment directly on IPSO's findings when asked but pointed to a separate staff survey, run by the ECB itself last year, showing that 83% of respondents were proud to work for the ECB and 72% would recommend it. The criticism by staff may sting because it relates to the core of the ECB's mission - wages and inflation. A similar IPSO survey of ECB staff, taken just before Lagarde's predecessor Mario Draghi stepped down, showed 54.5% of 735 respondents rated his presidency "very good" or "outstanding", with support for his policy measures even higher. "The ECB might be preaching lower real wages, but this is not our stance as your staff union," it wrote in its message to ECB employees.

☆ Investors Should Keep an Eye on Japan’s Kinky Yield Curve
▼ + stars: | 2023-01-12 | by ( James Mackintosh | ) www.wsj.com time to read: 1 min

Sometimes central banks trade on their credibility, as when Mario Draghi ‘s promise to do “whatever it takes” to save the euro was so widely believed that the European Central Bank ended up having to spend nothing. Sometimes, though, central banks trade directly against their credibility. The Bank of Japan set out in December to try to fix the distortions it had created in its government bond market through its policy of “yield-curve control.” It lifted the cap it has in place on the 10-year yield, allowing it to rise. Instead of solving the problem, it made it worse in some areas, spending large amounts of money along the way and ending up with tighter monetary policy that it says it doesn’t want.

Lufthansa declined to comment on Rome's decision to offer an initial minority stake. Some of Italy's politicians consider ITA as the heir to cultural icon Alitalia, which they want to preserve. Some also say that ITA does not have to worry so much about losing its national identity should Lufthansa take over. The Certares-led alliance was willing to pay 350 million euros for a 50% stake plus one share of the state-controlled airline, sources had said. ($1 = 0.9412 euros)Reporting by Angelo Amante in Rome and Joanna Plucinska in London; additional reporting by Giuseppe Fonte in Rome.

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