The governor of the Bank of Italy Antonio Fazio resigned Monday. He has been under criminal investigation for alleged abuse of power and insider trading.

The decision to resign by the governor of the Bank of Italy, Antonio Fazio, came on the eve of an emergency cabinet meeting to discuss ways of forcing the central banker to step down.

In a statement Monday, Mr. Fazio said he was resigning in the interest of the country and the Bank of Italy. He added that his decision had been taken freely and with a clear conscience.

The 69-year old central banker assumed the lifetime post in 1993. Italian prosecutors have been investigating him since September for alleged abuse of power for his role in banking takeover battles and for insider trading.

Investigations are focused on Mr. Fazio's role in the battle for takeover of the AntonVeneta bank by Banca Popolare Italiana and Dutch bank ABN Amro and won by the Italian bank.

The governor's role worsened last week after the arrest of his close friend and former CEO of Banca Popolare Italiana, Gianpiero Fiorani, on suspicion of criminal conspiracy to embezzle.

Mr. Fiorani has reportedly told prosecutors about his close relationship with governor and that he enjoyed the favor of the central bank. But Mr. Fazio has repeatedly denied any wrongdoing and has been resisting calls for his resignation since the summer.

Prime Minister Silvio Berlusconi said he had been expecting Mr. Fazio's resignation. He said it was a gesture of great seriousness and of absolute responsibility. He added that Mr. Fazio made the gesture at this time to return serenity to such a venerable institution as the Bank of Italy.

Italian politicians unanimously welcomed the decision taken by the Bank of Italy governor. Center-left opposition leader Romano Prodi said his resignation was long overdue and inevitable. He added that the opposition was ready to negotiate with the government to reach an agreement on his successor.

Mr. Prodi said the new governor would have to be someone with a "high international profile and someone who knows his way around in the complicated world of central bankers. He said the aim would be to repair the damage done over the past months and give the country back its credibility and international prestige."

European Central Bank board member Tommaso Padoa-Schioppa, former European Commissioner Mario Monti and Treasury Director General Vittorio Grilli are among the front-runners for the central bank post.