Mr Fazio denies inappropriate behaviour and will not step down

Mr Fazio is facing calls for his resignation over his handling of the battle for Italy's Banca Antonveneta.

Banca Popolare Italiana (BPI) beat Dutch rival ABN Amro to buy the lender.

But a scandal erupted when Mr Fazio was taped talking to BPI managing director Gianpiero Fiorani about the bid battle. The takeover is currently on hold.

'Detailed and clear'

Mr Fazio, 68, who is not under investigation by magistrates, attended a meeting of the Italian government's credit and savings committee in Rome on Friday.

He presented a 24-page report about his behaviour during the bidding process, which concluded by saying that the "Bank of Italy has scrupulously followed the norms of European Union and Italian regulations".

The committee said it had "taken note" of Mr Fazio's report and called on him to release it to the public.

Chaired by Economy Minister Domenico Siniscalco, the committee included a number of other ministers. The full government cabinet will be briefed on Mr Fazio's report next month.

Mr Fazio - who is one of Italy's most powerful men, has a job for life and counts Prime Minister Silvio Berlusconi among his supporters - is accused of using his position to keep Banca Antonveneta in Italian hands.

His critics again called on him to resign on Friday and accused the government of trying to cover up Mr Fazio's mistakes.

'Goose bumps'

Whatever the motivation behind Mr Fazio's actions, the one thing they have done is throw the spotlight back onto Italy's financial markets and their seeming lack of transparency.

Following the collapse of Parmalat, Italy promised sweeping reforms of its financial system in an effort to reassure investors and bring to an end a murky history of favours, deal making and cover-ups.

While some progress has been made, critics complain that Mr Fazio's behaviour is proof that there is still much to be done.

BPI's victory in the takeover was seen as a coup for Mr Fiorani

According to transcripts of taped conversations published in newspapers across Italy - including Corriere Della Sera and La Repubblica - Mr Fazio enjoyed candid conversations with BPI's Mr Fiorani about the progress the bids were making.

Mr Fazio's wife also is said to have called Mr Fiorani.

In one widely covered conversation on 12 July, in which Mr Fazio called to say he had approved BPI's bid, Mr Fiorani is reported to be heard saying that he was so emotional he had "goose bumps".

"Tonino...thank you, thank you. I would kiss you on the forehead if I could. " Mr Fiorani said. "I know how much you have suffered."

Decision making

According to reports, Mr Fazio overruled concerns voiced by Bank of Italy staff about the financial strength of BPI.

There are also a number of unanswered questions about how BPI was able to increase its stake in Banca Antonveneta to almost 30% - a move which effectively blocked ABN Amro's takeover attempt.

Mr Fazio said on Friday that BPI's capital levels were "ample" at the time of its takeover attempt.

As the man who regulates Italy's banking industry, Mr Fazio is expected to be impartial.