Mario Draghi, an investment banker and former Treasury official, was named Bank of Italy governor yesterday to succeed Antonio Fazio, who quit over a bank takeover scandal that tainted the country's image. "It is a good choice that was made unanimously by the Cabinet," Economy Minister Giulio Tremonti told reporters shortly before President Carlo Azeglio Ciampi ratified the appointment. News that Prof. Draghi will lead the central bank was welcomed by politicians in Mr Berlusconi's centre-right ruling coalition, eager to close the Fazio saga before it became a major problem before April general elections, as well as by the opposition.

Opposition leader Romano Prodi said Prof. Draghi would restore dignity to the Bank of Italy, "tested by the dramatic events that have shaken Italy's financial system".

Prof. Draghi, 58, has a wealth of international experience but faces arduous challenges following the bank takeover scandal which brought down Mr Fazio, including rebuilding morale at what was once one of Italy's most revered institutions.

The European Central Bank, which Prof. Draghi will automatically join as one of the 18 members who set interest rates for the eurozone, welcomed his appointment.

"Mario Draghi has wide national and international experience and will contribute substantially to the work of the Governing Council and General Council of the ECB," it said.

Currently a London-based vice-chairman at investment bank Goldman Sachs, Prof. Draghi is considered less autocratic than Mr Fazio and is expected to show less hostility to any attempts by foreign firms to enter Italy's lucrative bank market.

As Treasury director-general between 1991 and 2001, Prof. Draghi spearheaded sweeping privatisations in the energy, banking and telecommunications sectors and was in the front line of Italy's successful bid to join the European monetary union.

"It's a very good choice. The boost he will give to the country's credibility is more than any budget could do. We had touched the bottom in terms of credibility," said Francesco Giavazzi, economics professor at Milan's Bocconi University.

In a speech last year, Prof. Draghi said Europe was widely considered to have "an oligopolistic and generally inefficient bank market".

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