Italy's parliament gave final approval on Friday to a package of market reforms aimed at restoring investor confidence battered by a series of damaging financial scandals, most recently involving the Bank of Italy.
Prime Minister Silvio Berlusconi's government drafted the law in 2003 in response to the collapse of food firms Cirio and Parmalat and an Argentine bond default, all of which cost small Italian investors billions of euros (dollars).
Despite the perceived urgent need to tighten the rules on financial supervision, the bill became mired by in-fighting and clashes of interests within the cabinet.
It took a scandal at Italy's central bank -- which led to the resignation of its governor Antonio Fazio on Monday -- to prompt the government to force the bill through parliament, using confidence votes to ensure a majority in both houses.
"It's a job well done," Economy Minister Giulio Tremonti told journalists in parliament's upper house.
The law puts an end the powerful governor's job-for-life status, setting a renewable 6-year mandate bringing the terms of the job more into line with most other European central bankers.
Last-minute amendments to the bill also ensure the government will have a greater say in who replaces Fazio, who quit as head of the central bank amid investigations into alleged malpractice when he adjudicated a bank merger case.
Berlusconi has said the "Measures to protect investors" law will be his last major piece of legislation before next April's general election.
Speaking at the prime minister's traditional end-of-year news conference on Friday, he said parliament was likely to be dissolved on January 29 to allow time for the election campaign.
Apart from the changes to the Bank of Italy statutes, the law strengthens the country's Antitrust authority, which will share authority over bank mergers with the BOI, and sets new rules on providing information when issuing financial products.
It also slightly hardens the law on false accounting.
The reforms are likely to have their greatest impact in the banking sector, whose oversight was previously dominated by the Bank of Italy, which is itself 66 percent owned by Italy's four largest banks: Unicredito, Banca Intesa, Sanpaolo IMI and Capitalia.
Under the new law, Italy's Antitrust authority will probe possible abuses of dominant position in the sector, rather than the central bank. The Bank of Italy will still oversee bank mergers, but now in co-operation with Antitrust.
Another provision in the law will cap the voting power of the banking foundations which own controlling stakes in many Italian banks. In future they will only have 30 percent voting rights no matter how large the stake.
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