Dec. 19 (Bloomberg) -- Tommaso Padoa-Schioppa, architect of the euro currency and founding member of the European Central Bank’s executive board, has died. He was 70.
Padoa-Schioppa died after suffering a heart attack in Rome last night while at a dinner with about 100 people, the newspaper La Repubblica reported on its website.
“Tommaso Padoa-Schioppa was a renowned figure in international finance and politics, and I am honored to say he was a dear friend of mine for decades,” Eugene A. Ludwig, chief executive officer of Promontory Financial Group, said in a statement on the company’s website. “His death is a deep loss to me personally, and will be felt by all those in the international community who shared his commitment to bringing about a more civil and decent world order.”
Padoa-Schioppa, who fought for the single currency as a catalyst for European integration, served on the ECB’s executive board from 1999 until 2005. He was deputy director general of the Bank of Italy for 13 years, during which time he was passed over for the governorship in favor of Antonio Fazio in 1993. He was named finance minister under Italian Prime Minister Romano Prodi in May 2006, a position he kept until the government collapsed in January 2008.
The central banker completed a seven-year term on the ECB board overseeing the euro at the end of May 2005. The only founding board member to serve longer was Chief Economist Otmar Issing.
Son of Schoolteacher
“Our new currency unites not only economies, but also the people of Europe,” he said in June 1999, six months after the euro’s launch. “The society with these unifying bonds is now the European society, and not only a national society: this, I think, represents a profound change in human history.”
Tommaso Padoa-Schioppa was born July 23, 1940, in Belluno, northern Italy. His father, Fabio Padoa-Schioppa, worked in insurance and was a schoolteacher. He studied at the Bocconi University in Milan, where he got a degree in economics in 1966, and at the Massachusetts Institute of Technology. He was fluent in German and English.
He called his family “a cultivated” one in an interview with the Guardian newspaper in 2000. A former artillery officer, he described both his parents as “intellectual.”
“Tommaso was well-liked and a very capable person,” said Richard S. Eckaus, Padoa-Schioppa’s thesis supervisor at MIT, where the Italian was awarded a master’s degree in economics in 1970.
‘Man of Vision’
Padoa-Schioppa’s devotion to Europe and the euro was clear even in his jokes. Opening a dinner speech in Frankfurt in October 2004, he said his topic was the “emu,” an abbreviation for Economic and Monetary Union as well as the name of an ostrich-like Australian bird. “Neither,” he said, “can go backwards.”
“As a man of vision and strong European convictions, Tommaso Padoa-Schioppa was a powerful voice on the European monetary scene even before the creation of the euro,” ECB President Jean-Claude Trichet said in an e-mailed statement today. “He contributed decisively in the early years of the euro to the reputation of the ECB as a major actor in international and European cooperation.
‘‘Responsible for the ECB’s tasks in the area of financial stability, Tommaso Padoa-Schioppa aimed consistently at enhancing the architecture for financial stability and supervision in Europe by providing a clear vision for the medium- to long-term objectives and by making concrete contributions to strengthening cooperation and coordination among the competent national authorities,’’ Trichet said.
In 1988, Padoa-Schioppa served as joint secretary to the Delors Committee, called after the then-president of the European Commission, which was formed to investigate how European Union countries could remove all common trade barriers by introducing a single currency. The committee came up with a three-stage plan that was later included in the 1992 Maastricht Treaty that instituted the single currency.
Concerned that countries might retreat from their commitments to the single currency, Padoa-Schioppa developed a timetable for currency conversion that made it harder for member countries to back out of the project.
On the flight to Maastricht, he persuaded Giulio Andreotti, then Italian prime minister, to push for the euro’s initiation in 1999 if a majority of members didn’t agree on a date to start by 1997, according to Matt Marshall in his 1999 book on the euro’s creation called ‘‘The Bank.”
Currency Without State
The euro was introduced on Jan. 1, 1999, and was coined “a currency without a state” by Padoa-Schioppa.
“I do not think that a single currency is an event for the last days of the history of mankind that simply crowns perfection,” he said in his testimony before the European Parliament in May 1998. “It is something that has to be in reality while reality evolves.”
Padoa-Schioppa was picked to serve as Italian finance minister at a time when the country’s economy had stalled for two out of five years and the debt burden had ballooned to the largest in the EU. He focused on cutting government spending, often taking low-cost airlines to international meetings.
His efforts to cut spending ensured Italy’s budget deficit fell below the EU limit in 2007 for the first time since 2002. Before him, the annual deficit had widened to 4.3 percent of gross domestic product in 2005, a 10-year high at the time.
IMF Committee Head
The Brussels-based European Commission estimated on Nov. 29 that Italy’s budget deficit will be 4.3 percent of GDP next year, worse than the government’s 3.9 percent forecast.
In 2007, Padoa-Schioppa was named chairman of the International Monetary Fund’s policy advisory committee, a position he maintained even after Prodi’s government collapsed. He was replaced in May 2008 by Egyptian Finance Minister Youssef Boutros-Ghali.
Promontory Europe, the European unit of the financial-services consulting firm Promontory Financial Group, named Padoa-Schioppa as its chairman in June 2009. Four days ago, Fiat Industrial SpA appointed him to the board of the unit being spun off from the carmaker next month.
The Italian national helped Italy, regarded for years as the weakest euro member by investors, curb its deficit. Those skills will aid Greece, which only avoided default after the EU and the IMF forged a bailout worth 110 billion euros ($141 billion).
Padoa-Schioppa’s pro-bono assignment added Greece to a curriculum spanning 37 years of public service, beginning at the Bank of Italy in Rome in 1968 and including stints running the bank’s money-market and economic-research divisions before becoming deputy director general for 13 years from 1984.
“I am independent, I don’t have conflicts of interest and I won’t get paid for what I do,” he said about his new position.
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