nonetheless have a special responsibility to safeguard the value of such savings. it is indispensable that management choices should correspond to the risk profiles accepted by investors and, more generally, that the rules on risk diversification should be observed. the prudential limits on operations established and monitored by the authorities become of great importance. the structural changes under way in the italian financial system require the different supervisory regulators to intensify their coordination efforts. effective cooperation among authorities enhances the effectiveness of controls, and the ability to forestall instability is the key to achieving the efficiency gains that the growth of financial markets makes possible. the consolidated law imposes an obligation on the authorities to collaborate, inter alia by exchanging information ; they cannot invoke official secrecy in their dealings with each other. the importance of coordination is thus confirmed, in recognition of the dangers that inefficient cooperation is likely to entail for the integrity and efficiency of the financial system. at the same time collaboration must be informed by the principle of minimizing the costs borne by those subject to supervision. the globalization and increasing competition between financial centres that have accompanied the growth in asset management have also spurred a far - reaching reorganization of the securities markets. the consolidated law completes the innovations introduced by legislative decree 415 / 1996, which provided for the privatization of the stock exchange and the securities markets. the management of the markets is entrusted to limited companies that have private sector shareholders and self - regulatory powers in matters such as the admission of financial instruments and intermediaries to the market, as well as their exclusion and suspension. consob is charged with the supervision of the regulated markets ; the bank of italy has been given a primary role for the markets that are important for monetary policy purposes : the screen - based government securities market ( mts ) and the interbank deposit market ( mid ). 6. international coordination the response to the growing integration of markets has been to complete the reform of financial regulations, with the creation of a system of controls that is basically neutral with respect to the nature of intermediaries and based on cooperation among supervisory authorities. the internationalization of finance results in cooperation among the authorities of different countries becoming of fundamental importance. the increasing openness of financial markets makes the exchange of information indispensable, requires a flexible interpretation of cooperation agreements and calls for the coordination of corrective measures. the links between [UNK] supervisory bodies must be permanent, not restricted to crisis situations, and must involve both the authorities responsible

##s. the changes under way modify the exposure to systemic risk, the channels for the propagation of crises and the latter ’ s potential impact. the greater ramification of the financial market is likely to reduce the probability of a single intermediary ’ s difficulties spreading to the rest of the system. nonetheless, the number and size of today ’ s financial markets and institutions mean that it may prove more difficult to limit the effects of a crisis where one does occur. despite the progress made in adjusting the regulatory framework to the new reality of financial markets, supervisory authorities are faced with new challenges ; the most important concerns the coordination of their action, both domestically and internationally. the crises that have occurred in the last few years show how fast tensions can be transmitted across countries, markets and intermediaries. macroeconomic instability is likely to interact with elements of financial instability, spreading to the jurisdictions of several supervisory authorities, central banks and governments and involving international organizations. as globalization proceeds, the asymmetry between the integration of markets and the multiplicity of regulatory authorities increases the difficulty of carrying out supervision, calls for a parallel integration of supervisory action. coordination and the timely exchange of information can increase the ability to forestall crises and help overcome them when they do occur. [UNK] - 11 - the reform of the securities market and the opening of finance to international competition have broadened and strengthened the structure of italy ’ s financial system and improved its allocative efficiency. firms and households can turn to new intermediaries and new instruments. firms can tap a wider range of sources of external finance, raise long - term debt and, above all, make greater use of equity capital. in this way they can achieve a more solid financial structure that is better able to sustain investment. households have greater scope to diversify their financial portfolios with products that in the long run permit higher real rates of return. in today ’ s new conditions of monetary stability, the possibility of earning high returns at low risk that was a feature of the last twenty - odd years will no longer exist. in order to take full advantage of the opportunities offered by the development of the securities markets, intermediaries will have to make their investment choices keeping a close eye on economic fundamentals and firms ’ capital solidity and earnings prospects. it is not only intermediaries who must be fully aware of the growing complexity of financial intermediation and of the related risks, but also the investors who entrust them with their savings. [UNK] - 12 [UNK]