if sometimes they are the size of whales ). they short ( that is, short sell securities that they do not own ) when they understand that the immense school of fish that is right behind them – the investors who act on behalf of savers throughout the world – is unsure about what direction to take, to sell or not, and they try to point them toward selling. if they succeed, and the value of the securities sold collapses, they buy them back at a much lower price and honour the previous short sale, at a large profit. they come into play when there is already concern among ordinary investors because of worrying news circulating about this or that company or state. and in any case they are only motivated by the prospect of profit. which is all the more likely when they perceive in advance that the victim is teetering on the edge and all that is needed is a little push to make them fall. political sympathies and antipathies do not even enter their minds, it would cloud their vision, which must remain focused on making money. if the market basically means small savers, are domestic savers different from foreign ones? in other words, would i, as an italian, be more likely to choose, for patriotic reasons, to hold a btp ( an italian government security ) in my portfolio than a french or german saver would? maybe, but it is highly unlikely. money is money, and no one likes to lose it for love of country, except in exceptional circumstances, like a war. one economic difference could be that if the italian state, let us say, were to default, in other words if it were unable to redeem its bonds on time or could do so only in part, it would have to raise taxes to try to get back on its feet, thereby hurting its own citizens, but not the french and germans as well. italians might then be more reluctant to rid themselves of domestic government securities, when there is more bad news about their government ’ s finances, in an attempt to save the state and avoid further taxation. but this is more the reasoning of an economist discussing theory than of the average saver ; it is really very unlikely that this can explain the difference in behaviour between italian and foreign holders of italian public debt. another economic reason for the relatively greater inclination of italian savers to hold italian government bonds could be this : in the event of a partial default and consequent debt restructuring, the italian state could seek to protect

would like to mention three important dimensions along which i think the approach could be further improved. first, the boundary between the effects of micro and macroprudential policies is more artificial than real. the two, while different in purpose, share instruments and are directed to the same participants in the financial markets. indeed, it is the overall level of micro and macroprudential requirements that affects the ability of the financial system to finance the real economy, both in normal and stressed times. consequently, a narrow notion of the macroprudential stance should, in my opinion, be replaced with the more comprehensive one of an overall prudential stance, one that would account for how both categories of prudential measures affect the economy. let me emphasise that this is not just a question of semantics. microprudential capital requirements, for instance, have been substantially increased after the crisis. in the short run, the contractionary effects on the credit cycle associated with such an increase were, directionally and qualitatively, of the same nature as those associated with the activation of a cyclical buffer. this of course does not mean that it was wrong to do it ; an increase in the quantity and quality of bank capital was required to strengthen the banking system, in light of all the shortcomings of the old supervisory rules that the crisis had exposed. however, it was clear to all that there was a 1 / 3 bis central bankers'speeches price to pay for this, in terms of tighter credit : at least temporarily, during the transition to the new standards. an overall prudential stance measure would capture this policy tightening ; a narrower perspective misses it. had the former existed, it would have supplied valuable input, for instance, to the discussion on transitional arrangements. the discussion took place anyway, because regulators were qualitatively aware of the issue, but in a sort of informational vacuum. i would thus suggest to devote further thought to such issues of definition. the conceptual framework should also more explicitly capture the idea that one central aim of macroprudential policies is to limit the endogenous pro - cyclicality of the financial sector. risks tend to be underestimated by market participants during booms and overestimated in busts, resulting in an amplification of cycles. to lean against this procyclical pattern in risk perceptions, the framework for the macroprudential stance should have a clear cyclical perspective. one might also note that