Donald Trump will be the major draw at this year’s World Economic Forum in Davos, Switzerland, even as the U.S. president’s policies continue to undermine the spirit of global cooperation the elite gathering has championed in the past. “We’re pleased to welcome back President Trump to Davos, and he’s bringing the largest U.S. delegation ever,” WEF chief executive Børge Brende said at a press conference Tuesday. The U.S. president will bring “five secretaries and also other key players,” including a bipartisan delegation from the U.S. Congress, Brende said. The World Economic Forum, which takes place next week in the Alpine ski resort, comes as the world hangs on Trump’s words. Since the start of the month, Trump has captured Venezuelan dictator Nicolás Maduro, threatened to invade Greenland, hinted he could take action in Iran over violent crackdowns on protesters, announced a temporary cap on credit card interest rates that has stoked fears of a credit crunch, and opened a criminal investigation into Jerome Powell, chair of the U.S. Federal Reserve. Brende said the meeting will take place “against the most complex geopolitical backdrop since 1945.” According to the WEF, Trump will be joined by Canadian PM Mark Carney, China’s Vice-Premier He Lifeng, Ukrainian President Volodymyr Zelenskyy and leaders from Israel and Palestine. From Europe, European Commission President Ursula von der Leyen will attend along with leaders from Germany, Spain, Belgium, Finland, Greece, Ireland, the Netherlands, Poland and Serbia. NATO Secretary-General Mark Rutte will also join. The informal grouping of countries supporting Ukraine, known as the “coalition of the willing,” are expected to meet with Trump and Zelenskyy on the sidelines of the WEF to seek U.S. backing for security guarantees for Ukraine, the Financial Times reported. Business leaders, including the head of AI giant Nvidia Jensen Huang and top executives from Microsoft, Meta, Palantir, Anthropic and OpenAI, will join senior leaders from JPMorgan, Goldman Sachs, BlackRock and other major finance players in Davos. International organizations, which have seen their standing and funding rocked by Trump’s administration — including last week’s U.S. withdrawal from dozens of international organizations and the world’s overarching climate change treaty — will also attend. The heads of the United Nations, the World Trade Organization, the World Bank, the International Monetary Fund, the World Health Organization and the Organisation for Economic Co-operation and Development will take part. Celebrities and artists including David Beckham, Yo-Yo Ma, Marina Abramović, Matt Damon and will.i.am will also attend. The theme of the gathering will be “A Spirit of Dialogue.” “We do hope that a spirit of dialogue can also lead to areas where the leaders can find overlaps in interests,” Brende said.

Global central banks rallied behind Federal Reserve Chair Jerome Powell on Tuesday, pushing back against a perceived political attack on the independence of the world’s most important financial institution. “We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” the officials said in a joint statement. “The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability.” The statement was signed by European Central Bank President Christine Lagarde on behalf of the ECB’s Governing Council, by Bank of England Governor Andrew Bailey as well as the heads of the Swiss, Swedish, Danish, Australian, Canadian, South Korean and Brazilian central banks. Pablo Hernández de Cos, general manager of the Bank for International Settlements and François Villeroy de Galhau, chair of the Board of Directors of the Bank for International Settlements, also signed the statement. Over the weekend, Powell disclosed that the Fed had been served with grand jury subpoenas by the Department of Justice, raising the threat of a criminal indictment tied to his congressional testimony on the ongoing renovation of the Fed’s Washington headquarters. In what amounted to a dramatic escalation in the standoff between the White House and the central bank, Powell used an unusually direct video message to argue that the legal action is politically motivated and part of a campaign of “intimidation,” designed to push the Fed into cutting interest rates more aggressively. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said in language rare in its starkness for a serving Fed chair. Trump, a longtime critic who has piled personal insults on Powell since his reelection both through ad hoc comments and through his social media feed, denied any role in the investigation. Speaking to NBC News on Sunday, Trump said he was unaware of the probe but added that Powell is “certainly not very good at the Fed, and he’s not very good at building buildings.” The joint statement on Tuesday took a different view. “Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest,” it said. “To us, he is a respected colleague who is held in the highest regard by all who have worked with him.” Expressions of support for Powell from around the world had already begun on Monday, with Bundesbank President Joachim Nagel telling POLITICO that: “The independence of central banks is a prerequisite for price stability and a great public good. Against this background, the recent developments in the U.S. regarding the Fed chairman are cause for concern.” Bank of France Governor Villeroy de Galhau, meanwhile, had told a  new year event at the ACPR regulator that Powell was “a model of integrity and commitment to the public interest.” POLITICO reported on Monday that the decision to subpoena the Fed had also raised concern among various White House officials, who are concerned that it may trigger volatility in financial markets and complicate efforts to keep the economy on track in an election year. Senior Republican Party lawmakers have also spoken out against the move.

BRUSSELS — Diplomats are working on a long-shot 11th-hour compromise to salvage a deal on sending vital financial aid to Ukraine at Thursday’s high-stakes EU leaders’ summit. On Wednesday evening Europe’s leaders were split into irreconcilable camps, at least publicly, and seemed unlikely to agree on how to fund Kyiv, thanks partly to the reemergence of the same bitter north-south divisions over joint debt that torpedoed EU unity during the eurozone crisis. Only a few hours before the 27 leaders gather in Brussels, two opposing groups are crossing swords over whether to issue a loan to Ukraine based on frozen Russian central bank reserves, largely held by the Euroclear bank in Belgium. Germany along with Nordic and Eastern European countries say there is no alternative to that scheme. But they are running into hardening resistance from Belgium and Italy, which are gunning for Plan B: Support for Kyiv based on EU debt guaranteed by the bloc’s common budget. Bulgaria, Malta, Hungary and Slovakia are also against the use of the assets. In a stark illustration of the schism, Italian Prime Minister Giorgia Meloni said on Wednesday she would use the Council meeting to demand answers on the “possible risks” of leveraging the assets, while German Chancellor Friedrich Merz doubled down on the assets plan “to help end this war as quickly as possible.” ESCAPE PLAN The first contours of a potential route out of the impasse — one that would have to be hashed out during hours of negotiations — are beginning to take shape. European Commission President Ursula von der Leyen cautiously opened the door to joint debt on Wednesday morning during a speech at the European Parliament in Strasbourg. “I proposed two different options for this upcoming European Council, one based on assets and one based on EU borrowing. And we will have to decide which way we want to take,” she said. The key to such a plan would be carving Hungary and Slovakia — which both oppose giving further aid to Ukraine — out of the joint debt scheme, four EU diplomats told POLITICO. A deal could still be agreed at the Council among the 27 EU countries, but the ultimate arrangement would stipulate that only 25 would be involved in the funding. Agreeing such a scheme would give a crucial lifeline to Ukraine’s shattered public finances as its coffers risk running dry as early as next April. Hungary’s Viktor Orbán is already predicting the assets will not be discussed in Brussels, and that negotiations have shifted to joint loans. Multiple diplomats, however, retorted that Orbán was wrong and that the Russian assets were still “the only game in town.” CRUNCH TIME Despite growing political pressure on the EU to prove it can rise to meet the existential challenges facing Ukraine, diplomats from the rival camps were often skeptical on Wednesday that a compromise could be found. The idea of EU joint debt has for years been anathema to the northern member countries, who have been unwilling to underwrite bonds for highly indebted southern countries. “The closest [situations] to what’s happening now with frozen assets are the 2012-2013 financial crisis and Greece’s bailout in 2015,” said a senior EU diplomat who, like others quoted in this story, was granted anonymity to speak freely. With respect to the Ukraine war, the northerners deny they oppose the use of eurobonds over concerns about the solvency of other EU countries, but argue they prefer the assets because they would provide a greater long-term cash infusion to Ukraine. “This is not about frugals versus spenders. It’s about being pro-Ukraine or not,” said a second EU diplomat, adding that northern and eastern European countries have taken the lead in bankrolling Ukraine’s war needs over the past four years. BACKING THE BELGIANS Despite weeks of painstaking negotiations over the assets, efforts to bring Belgium around are backfiring. The country adamantly opposes using the Russian money held by Euroclear in Brussels, and has now attracted allies. “[The Commission] created a monster, and they’ve been eaten by it,” said a third EU diplomat, referring to the assets plan. Germany and its allies, however, warn there is still no alternative to targeting the Euroclear money. “If you want to do something together as Europeans, the reparations loan is the only way,” a fourth EU diplomat said. The idea behind the assets-based loan is that Kyiv would not have to repay it unless Moscow coughs up the billions-worth of reparations needed to rebuild Ukraine’s pulverized cities — an unlikely scenario. Belgian Prime Minister Bart De Wever is expected to push the Commission to explore joint debt during Thursday’s summit of EU leaders — in the hope that others around the table will echo his demands. His supporters claim the model “is cheaper and offers more clarity,” said a fifth EU diplomat. But critics point out it will also require the political blessing of Hungary’s pro-Russia Prime Minister Orbán — who has repeatedly threatened to torpedo further financial aid to Kyiv. The impasse would require the Commission to concoct a workaround to keep Ukraine afloat while allowing Orbán to save face, according to the four EU diplomats. In exchange for his support the Commission could spare Hungarian and Slovak taxpayers from having to pay for Ukraine’s defense.   “The Commission now pushes joint loans, but we will not let our families foot the bill for Ukraine’s war,” Orbán wrote on X on Wednesday afternoon. He added that “Russian assets will not be on the table at tomorrow’s EUCO [European Council].” However, a senior EU official was quick to reject the Hungarian leader’s claim that the Russian reserves were no longer in play. “The reparations loan is still very much on the table,” they said. Bjarke Smith-Meyer, Gabriel Gavin and Gerardo Fortuna contributed to this report

BRUSSELS ― Two legal opinions prepared by international lawyers contradict Belgium’s claim it could be on the hook to pay substantial damages if the EU moves ahead with plans to use Russia’s frozen assets to help Ukraine. Belgian Prime Minister Bart De Wever has said his country could be found liable for using the assets, arguing in a letter to European Commission President Ursula von der Leyen that the risk of successful legal retaliation by Moscow is “very real.” Russia has since ramped up those fears, with the central bank filing a lawsuit in Moscow against Brussels-based financial depository Euroclear — where most of Russia’s frozen assets in Europe are held — over the freezing of funds and securities. But according to two legal opinions — one prepared by law firm Covington & Burling, another by a group of international legal scholars — assert that the risk of a successful legal claim against Belgium over the assets is minimal.  The main reason cited by the scholars is that Russia would find it nearly impossible to find a jurisdiction that would be willing to hear a case against Belgium or enforce any claim against the Belgian government or Euroclear over the assets. “Any judgment of a Russian court would not be recognized or enforced in the EU or the U.K. on public policy grounds,” six legal scholars wrote in a paper, adding that the Russian central bank is unlikely to bring claims in either U.K. or EU jurisdictions because doing so would waive its sovereign immunity. A claim brought before the Court of Justice of the European Union, the International Court of Justice or any comparable international institution would prove similarly problematic largely because Russia does not accept their jurisdiction, argue the authors of a paper by Covington & Burling.  In his letter to von der Leyen, De Wever raised the fact that Belgium has a bilateral investment treaty with Russia that exposes Brussels to legal risk in the event of a dispute. The letter cites specialized law firms but does not name them. The authors of both legal opinions assert that Russia would not be able to pursue its claim against Belgium or the EU via such a treaty due to the fact that the treaty does not cover sovereign assets. “A Tribunal constituted pursuant to such a treaty would lack jurisdiction to hear a dispute relating to alleged expropriation of Russia’s sovereign assets,” wrote Covington & Burling. The legal scholars — who are linked among other institutions to Stanford University, the Kyiv School of Economics and German law firm Bender Harrer Krevet, among others — conclude that Belgium has already weathered the most serious risk when the assets were frozen in the first place and when the EU voted to immobilize them indefinitely. “No material new risks will be created by adopting the full Reparations Loan plan and any such negligible risks are materially outweighed by the proposal’s benefits for European peace, security, stability, and the long-term viability of Ukraine,” write the scholars. The Belgian government did not respond to POLITICO’s request for comment.

Russia’s central bank on Friday filed a lawsuit in Moscow against Brussels-based Euroclear, which houses most of the frozen Russian assets that the EU wants to use to finance aid to Ukraine. The court filing comes just days before a high-stakes European Council summit, where EU leaders are expected to press Belgium to unlock billions of euros in Russian assets to underpin a major loan package for Kyiv.   “Due to the unlawful actions of the Euroclear depository that are causing losses to the Bank of Russia, and in light of mechanisms officially under consideration by the European Commission for the direct or indirect use of the Bank of Russia’s assets without its consent, the Bank of Russia is filing a claim in the Moscow Arbitration Court against the Euroclear depository to recover the losses incurred,” the central bank said in a statement. Belgium has opposed the use of sovereign Russian assets over concerns that the country may eventually be required to pay the money back to Moscow on its own. Some €185 billion in frozen Russian assets are under the stewardship of Euroclear, the Brussels-based financial depository, while another €25 billion is scattered across the EU in private bank accounts. With the future of the prospective loan still hanging in the air, EU ambassadors on Thursday handed emergency powers to the European Commission to keep Russian state assets permanently frozen. Such a solution would mean the assets remain blocked until the Kremlin pays post-war reparations to Ukraine, significantly reducing the possibility that pro-Russian countries like Hungary or Slovakia would hand back the frozen funds to Russia. While Russian courts have little power to force the handover of Euroclear’s euro or dollar assets held in Belgium, they do have the power to take retaliatory action against Euroclear balances held in Russian financial institutions. However, in 2024 the European Commission introduced a legal mechanism to compensate Euroclear for losses incurred in Russia due to its compliance with Western sanctions — effectively neutralizing the economic effects of Russia’s retaliation. Euroclear declined to comment.

BRUSSELS — European banks and other finance firms should decrease their reliance on American tech companies for digital services, a top national supervisor has said. In an interview with POLITICO, Steven Maijoor, the Dutch central bank’s chair of supervision, said the “small number of suppliers” providing digital services to many European finance companies can pose a “concentration risk.” “If one of those suppliers is not able to supply, you can have major operational problems,” Maijoor said. The intervention comes as Europe’s politicians and industries grapple with the continent’s near-total dependence on U.S. technology for digital services ranging from cloud computing to software. The dominance of American companies has come into sharp focus following a decline in transatlantic relations under U.S. President Donald Trump. While the market for European tech services isn’t nearly as developed as in the U.S. — making it difficult for banks to switch — the continent “should start to try to develop this European environment” for financial stability and the sake of its economic success, Maijoor said. European banks being locked in to contracts with U.S. providers “will ultimately also affect their competitiveness,” Maijoor said. Dutch supervisors recently authored a report on the systemic risks posed by tech dependence in finance. Dutch lender Amsterdam Trade Bank collapsed in 2023 after its parent company was placed on the U.S. sanctions list and its American IT provider withdrew online data storage services, in one of the sharpest examples of the impact on companies that see their tech withdrawn. Similarly a 2024 outage of American cybersecurity company CrowdStrike highlighted the European finance sector’s vulnerabilities to operational risks from tech providers, the EU’s banking watchdog said in a post-mortem on the outage. In his intervention, Maijoor pointed to an EU law governing the operational reliability of banks — the Digital Operational Resilience Act (DORA) — as one factor that may be worsening the problem. Those rules govern finance firms’ outsourcing of IT functions such as cloud provision, and designate a list of “critical” tech service providers subject to extra oversight, including Amazon Web Services, Google Cloud, Microsoft and Oracle. DORA, and other EU financial regulation, may be “inadvertently nudging financial institutions towards the largest digital service suppliers,” which wouldn’t be European, Maijoor said. “If you simply look at quality, reliability, security … there’s a very big chance that you will end up with the largest digital service suppliers from outside Europe,” he said. The bloc could reassess the regulatory approach to beat the risks, Maijoor said. “DORA currently is an oversight approach, which is not as strong in terms of requirements and enforcement options as regular supervision,” he said. The Dutch supervisors are pushing for changes, writing that they are examining whether financial regulation and supervision in the EU creates barriers to choosing European IT providers, and that identified issues “may prompt policy initiatives in the European context.” They are asking EU governments and supervisors “to evaluate whether DORA sufficiently enhances resilience to geopolitical risks and, if not, to consider issuing further guidance,” adding they “see opportunities to strengthen DORA as needed,” including through more enforcement and more explicit requirements around managing geopolitical risks. Europe could also set up a cloud watchdog across industries to mitigate the risks of dependence on U.S. tech service providers, which are “also very important for other parts of the economy like energy and telecoms,” Maijoor said. “Wouldn’t there be a case for supervision more generally of these hyperscalers, cloud service providers, as they are so important for major parts of the economy?” The European Commission declined to respond.

The discussion surrounding the digital euro is strategically important to Europe. On Dec. 12, the EU finance ministers are aiming to agree on a general approach regarding the dossier. This sets out the European Council’s official position and thus represents a major political milestone for the European Council ahead of the trilogue negotiations. We want to be sure that, in this process, the project will be subject to critical analysis that is objective and nuanced and takes account of the long-term interests of Europe and its people. > We do not want the debate to fundamentally call the digital euro into question > but rather to refine the specific details in such a way that opportunities can > be seized. We regard the following points as particularly important: * maintaining European sovereignty at the customer interface; * avoiding a parallel infrastructure that inhibits innovation; and * safeguarding the stability of the financial markets by imposing clear holding limits. We do not want the debate to fundamentally call the digital euro into question but rather to refine the specific details in such a way that opportunities can be seized and, at the same time, risks can be avoided. Opportunities of the digital euro:  1. European resilience and sovereignty in payments processing: as a public-sector means of payment that is accepted across Europe, the digital euro can reduce reliance on non-European card systems and big-tech wallets, provided that a firmly European design is adopted and it is embedded in the existing structures of banks and savings banks and can thus be directly linked to customers’ existing accounts. 2. Supplement to cash and private-sector digital payments: as a central bank digital currency, the digital euro can offer an additional, state-backed payment option, especially when it is held in a digital wallet and can also be used for e-commerce use cases (a compromise proposed by the European Parliament’s main rapporteur for the digital euro, Fernando Navarrete). This would further strengthen people’s freedom of choice in the payment sphere. 3. Catalyst for innovation in the European market: if integrated into banking apps and designed in accordance with the compromises proposed by Navarrete (see point 2), the digital euro can promote innovation in retail payments, support new European payment ecosystems, and simplify cross-border payments. > The burden of investment and the risk resulting from introducing the digital > euro will be disproportionately borne by banks and savings banks. Risks of the current configuration: 1. Risk of creating a gateway for US providers: in the configuration currently planned, the digital euro provides US and other non-European tech and payment companies with access to the customer interface, customer data and payment infrastructure without any of the regulatory obligations and costs that only European providers face. This goes against the objective of digital sovereignty. 2. State parallel infrastructures weaken the market and innovation: the European Central Bank (ECB) is planning not just two new sets of infrastructure but also its own product for end customers (through an app). An administrative body has neither the market experience nor the customer access that banks and payment providers do. At the same time, the ECB is removing the tried-and-tested allocation of roles between the central bank and private sector. Furthermore, the Eurosystem’s digital euro project will tie up urgently required development capacity for many years and thereby further exacerbate Europe’s competitive disadvantage. The burden of investment and the risk resulting from introducing the digital euro will be disproportionately borne by banks and savings banks. In any case, the banks and savings banks have already developed a European market solution, Wero, which is currently coming onto the market. The digital euro needs to strengthen rather than weaken this European-led payment method. 3. Risks for financial stability and lending: without clear holding limits, there is a risk of uncontrolled transfers of deposits from banks and savings banks into holdings of digital euros. Deposits are the backbone of lending; large-scale outflows would weaken both the funding of the real economy – especially small and medium-sized enterprises – and the stability of the system. Holding limits must therefore be based on usual payment needs and be subject to binding regulations. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. , Schellingstraße 4, 10785 Berlin, Germany * The ultimate controlling entity is Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. , Schellingstraße 4, 10785 Berlin, Germany More information here.

The European Parliament could have an early say in the race for the European Central Bank vice presidency, a win for lawmakers after years of pushing for more influence over the EU’s top appointments. Eurozone finance ministers will begin the process of selecting a successor to Luis de Guindos on Thursday, according to a draft timeline seen by POLITICO and an EU diplomat who separately confirmed the document’s content. The deadline for submitting candidates will be in early January, although an exact date is still to be agreed.  According to the document, members of the Economic and Monetary Affairs Committee will have the right to hold in-camera hearings with all the candidates in January before the Eurogroup formally proposes a name to the European Council for appointment. This would mark a break with the past, when MEPs only got involved in the process after ministers had already had their say. Involving the Parliament at an earlier stage could influence the selection process, for example by giving it the chance to press for adequate gender balance in the list of candidates. This had been one of the Parliament’s demands in its latest annual report on the ECB’s activities. “The Parliament will play a stronger role this time,” the diplomat told POLITICO. So far, only Greece is considering proposing a woman for the vice president slot: Christina Papaconstantinou, who is currently deputy governor at the C. Finland, Latvia, Croatia and Portugal are all set to propose male candidates. The candidate picked by ministers will return to lawmakers for an official hearing, which should take place between March and April, according to the document. MEPs have limited power over the final appointment, but they will issue a nonbinding opinion, which is then adopted through a plenary vote. The new vice president will be formally appointed by the European Council in May, before taking office on June 1. So far, only Greece is considering proposing a woman for the vice president slot. | Aris Messinis/Getty Images The vice president’s position is the first of four to come up for rotation at the ECB’s Executive Board over the next two years. It wasn’t immediately clear if the other three appointments — including the one for a new president — will give the lawmakers the same degree of influence. CORRECTION: This article was updated on Dec. 9 to correct the spelling of the surname of the deputy governor of the Bank of Greece.

Giorgia Meloni’s Brothers of Italy party is picking a fight with the country’s influential central bank over gold reserves, stepping up a conflict between the government and the country’s technocratic elite. Last month, Lucio Malan, who is chief whip for the Brothers of Italy in the Senate and a close ally of Meloni, introduced an amendment to the 2026 budget that would assert the Italian state’s ownership of close to €290 billion worth of gold reserves held by the Bank of Italy.  At first glance, it seems clear enough why this amendment came into being. Italy has a staggering amount of debt on its books, around 140 percent of the national gross domestic product, and is under strict EU orders to rein in its deficit, resulting in a perennial budget squeeze.  So it might seem logical to raid the world’s third-largest reserve of gold to pay down Europe’s second-largest debt pile. The temptation to do so has been getting stronger by the day: The value of the Bank’s hoard has risen 60 percent over the past year, thanks to a global rally driven largely by other central banks’ buying. But as usual in Italy, it’s not so simple. For one, the amendment doesn’t imply putting the gold to any specific use, but merely claims that the gold is property of the Italian people. “Nothing is going to be transferred,” Malan himself told POLITICO over the weekend. “That gold has always belonged to the Italian people, and that’s going to stay the same.” He pushed back at “even the most distant hypothesis that even the smallest part of the gold reserves are going to be sold off.”  Just as well. Three previous prime ministers — Romano Prodi, Silvio Berlusconi and Giuseppe Conte — have all had a sniff at similar schemes to bring the gold under more direct government control. But those schemes — the last of which was only six years ago — all foundered on the objections of the European Central Bank. The ECB published a withering opinion on the legality of the proposal on Wednesday, bluntly reminding Rome that the EU Treaty gives the Eurosystem exclusive rights over holding and managing the foreign reserves of those countries that use the euro (and pointing out that it said exactly the same thing six years ago). “This proposal has no chance of materializing,” said Lucio Pench, a professor specializing in economic governance and a fellow at the think tank Bruegel, pointing to the “clear conflict” with the EU treaty. But if the amendment is essentially just gesture politics, the question arises — what exactly is its purpose? A SHOT ACROSS THE BOW Some see in it a warning shot at the Bank of Italy, arguing that Malan, as Meloni’s chief Senate whip, is unlikely to have acted without the premier’s consent (Malan himself didn’t comment on whether Meloni approved the amendment). In the corridors of the Bank itself, behind its neoclassical facade on Via Nazionale in the heart of Rome, the move prompted consternation at the highest levels.  “I can tell you that people at the bank are furious,” fumed one official, adding that the proposal is illegal under EU law. “Our government — even if made up of thieves — cannot steal from the central bank, even if it writes it into a law.” Lucio Malan, a close ally of Meloni, introduced an amendment to the 2026 budget that would assert the Italian state’s ownership of close to €290 billion worth of gold reserves held by the Bank of Italy. | Simona Granati/Getty Images The Bank of Italy declined to comment on that point, but several Bank officials admitted privately that the move is consistent with a growing sense of antagonism from Meloni’s government. The Bank has always drawn the ire of the populist right, which blames it variously for the erosion of real wages over three decades and for the fall of the late Silvio Berlusconi.  But such antagonism is also consistent with a broader trend across the Western world, where deeply indebted governments are leaning on their central banks, as fiscal needs become more pressing and as dissatisfaction with the technocratic management of the economy grows. U.S. President Donald Trump’s attacks on the Federal Reserve this year have been the clearest example of that but, as one ECB official told POLITICO, the “independence of central banks is not only the problem of the U.S. — there is some encroachment globally happening.” There have been signs that the once close relations between Meloni the Bank’s governor Fabio Panetta — whom she brought home expressly from ECB headquarters in Frankfurt — have cooled. Indeed, Panetta was initially derided by some within the Bank for his apparent deference to the premier. However, some officials believe that relationship was strained when the Bank’s head of research, Fabrizio Balassone, criticized a government budget draft last month, suggesting that tax cuts aimed at the middle classes were more beneficial to wealthy Italians than poor ones. Bank officials maintained the analysis was purely technical and apolitical — “It was, like, two plus two,” one said in defense of Balassone — but it caused a storm in the right-wing, Meloni-supporting press.  The Bank’s leadership worried that the government was not respecting the 132 year-old institution’s “traditions of independence,” said another. Others see the amendment as being of a piece with a broader struggle against Italian officialdom: Francesco Galietti, a former Treasury official and the founder of political risk consultancy Policy Sonar, noted that in recent months, Meloni has pushed through a bill to rein in what she sees as a politicized judiciary, and also clashed with the head of state, President Sergio Mattarella, over an article that suggested he was plotting to prevent her from being reelected. Malan himself insisted that the gold initiative was not directed “against anybody at all.” He nevertheless described the move as emblematic of the Brothers of Italy’s “battle” — without elaborating. BROADER PLAY  Toothless though the bill is now, it still represents an interesting test case for how robustly the EU is willing to defend its laws against national governments who, across the continent, are becoming more and more erratic as they struggle with the constraints of economic stagnation and demographic decline. Earlier this year, the European Commission stood by while Meloni’s government strong-armed UniCredit, one of Italy’s largest banks, into abandoning a takeover that didn’t suit it. EU antitrust authorities only launched an infringement procedure after UniCredit dropped its bid in frustration. Reports also suggest that pressure from Rome is set to scupper a planned merger between the asset management arm of Generali, Italy’s largest insurer, with a French rival, out of fear that the new company would be a less reliable buyer of Italian government debt. If unchallenged, the latest initiative could soon become an existential challenge for the Bank of Italy, said a former official who maintains close connections to Bank leadership. “If you take the gold from the Bank of Italy, it no longer has any reason to exist,”he said. And while Governor Panetta collaborated happily with Meloni at first, “there’s always a limit,” the official said. “When it comes to independence, that’s where it ends — this is only the beginning of a war.” This article has been updated to include the ECB’s legal opinion.

LONDON — Nigel Farage’s second-in-command called for a rethink of the U.K.’s interest rate-setting committee in a fresh sign that a Reform UK government could intervene in Britain’s independent central bank. Richard Tice, the deputy leader of the populist-right party that’s surging in U.K. polls, told POLITICO in an interview that there should be a debate over potentially sweeping changes to the make-up and role of the Bank of England’s Monetary Policy Committee (MPC).  “It’s not unreasonable to check whether or not we’ve got the membership of the MPC right. I mean, it’s almost 30 years,” he said, referencing the 1997 establishment of the MPC. “So you could say, well, have we got the membership right? Have we got the number of government representatives right? Should they or shouldn’t they have a vote? Have we got the mandate right?”  He added: “Should it have a growth mandate? We should have that debate.”  The BoE’s rate-setting committee is made up of nine members, including Governor Andrew Bailey, four senior central bank executives, and four independent external members appointed by the chancellor. A representative from the U.K. Treasury joins MPC meetings but is not allowed to vote.   Monetary policy has become increasingly politicized since the Covid-19 pandemic, after which inflation soared to double digits and the BoE raised rates to their highest levels in 15 years. The International Monetary Fund has warned the U.K. faces the highest inflation in the G7 this year and next.   Tice’s comments come ahead of a speech in the City of London Wednesday, where he is expected to set out a wide-ranging aspiration for financial services deregulation should Reform UK enter government in Britain’s 2029 general election. The deputy leader said the U.K. needs a “complete sea change” in how risk is approached in the City, and called for further red tape cutting on banks, hedge funds and other City giants. “No one’s stepping back and asking big, philosophical questions,” he said.   Tice told POLITICO his party is “happy” with the BoE’s independence, but said it is “ridiculous” that “no one dares to” question the performance of the central bank despite the U.K. “outsourcing all responsibility for massive issues that affect ordinary people.”  He argued the BoE had “failed” under Conservative Liz Truss, who was forced out as prime minister after bond yields spiked in the wake of a tax-cutting budget, leading banks to increase their lending rates. Tice accused City regulators of “missing” the issue of liability-driven investments (LDIs), which increased the strain on pension funds during that period, and said the Bank of England “could have actually stepped in and prevented the carnage.”  Truss has repeatedly blamed the Bank of England for failing to anticipate the market consequences of her budget. The central bank intervened after her mini-budget to calm the markets by implementing an emergency bond buying scheme.  WIDER REFORM Reform leader Farage, who is set to give a speech in the City Monday on his broader vision for the economy, has gone further, saying Bailey has “had a good run” and he “might find someone new” if the party wins the next election.  Bailey’s term is due to end in 2028, before the election. Tice did not rule out the prospect of a Reform government forcing out an underperforming central bank governor in future, saying: “At the end of the day, any public official has to be accountable for their performance.”  However, he declined to liken Reform’s stance to Donald Trump’s approach to the Federal Reserve, after the U.S. president repeatedly attempted to get rid of chair Jerome Powell.  Reform UK is currently ahead in the polls, as Britain’s Labour government continues to struggle with its messaging on the economy, immigration and frustration within Prime Minister Keir Starmer’s top ranks. Reform leader Nigel Farage, who is set to give a speech in the City Monday on his broader vision for the economy. | Mark Kerrison/Getty IMages Tice argued Labour — which has made growth its primary objective by rolling back 2008 financial crisis legislation — is adding rather than removing regulation, and accused it and the opposition Conservatives of “tinkering around the edges.”  “We’re not going to create any form of meaningful growth under the current trajectory of this government, or under the trajectory of any Conservative plans,” he said. “We are heading towards impoverishment and growth has relentlessly declined as borrowing has relentlessly increased, particularly if you look per head. And it requires a complete sea change in the way that we think about risk and reward.”  Asked whether a Reform government would go further than Labour on deregulation, Tice said: “Yes. We want to ask some very big questions about how we do things.”  Tice also argued that regulators such as the Financial Conduct Authority — which Farage hopes to strip of its role regulating banks — have “utterly failed to do their job.”  Asked if he believes Britain has now moved on enough since the 2008 financial crisis to strip away “protections,” he replied: “There are all sorts of different reasons why the ’08 crash happened. But we supposedly had all the mechanisms of protection there, and they failed. No one was properly held to account.”