speech made at the 63rd meeting of government studies on ‘ la tutela degli interessi finanziari della collettivita nel quadro della contabilita pubblica : principi, strumenti, limiti ’, varenna, 21 september 2017. see also i. visco, the governor ’ s concluding remarks for 2017, in the annual report for 2017, banca d ’ italia, 29 may 2018. as i have already mentioned, increasing spending on investment by means of deficit financing, without addressing growth potential, would only be of temporary benefit. reducing the primary surplus by one percentage point of gdp compared with the current level would lead to a small decrease in the debt - to - gdp ratio thanks to the expansionary boost to economic activity ; however, with no long - term increase in economic growth, the debt - to - gdp ratio would soon rise again, even if there were no negative reactions on the financial markets ( figure 7b ). the situation would be different if the resources obtained by means of a larger deficit were used so as to increase growth potential and if the risk premium on italian government securities were reduced : with annual growth of more than one percentage point and with the yields on government securities returning to the values recorded at the beginning of this year, the debt - to - gdp ratio would begin to follow a stable, albeit not particularly rapid, downward trajectory. above all, we must not underestimate the risks which, given the high level of public debt, an unproductive increase in the deficit would expose us to. a negative reaction on the markets – for example a 200 basis point increase in risk premiums, remaining below the level recorded at the end of 2011 – would trigger a rapid increase in the debt - to - gdp ratio ; considering the negative impact on economic growth of the increase in interest rates and crisis of confidence, the ratio would soon be on an unsustainable path ( figure 7c ). * * * the debt reduction plan that i presented last year was an indicative scenario ; it is possible to draw up prudent strategies, capable of guaranteeing the stability of the public finances combined with better growth prospects. this is the narrow path that has been much spoken of in these difficult years. we can follow this path slowly, one step at a time, by implementing a series of interventions that gradually produce benefits until all the necessary changes have been made. or we can try

sustainable development and climate risks : the role of central banks speech by ignazio visco governor of the bank of italy sustainable development festival 2019 ‘ finance and financial system for sustainable development ’ the italian alliance for sustainable development rome, 21 may 2019 the question of whether natural resources and the development objectives of nations are compatible is an issue that has long been debated in the field of economics. it dates back to at least the end of the 18th century with the works of thomas malthus on food supply and population growth and has re - emerged a number of times since then in the public debate. for example, at the start of the 1970s, in the wake of the demographic explosion and the related exponential growth in consumption, the simulations produced for the project of the club of rome on the ‘ predicament of mankind ’ set off an alarm which resonated strongly at international level concerning the risks to the survival of our ecosystems and of the human race itself. it was then observed that the scarcity of natural resources envisioned in that analysis, largely based on a linear extrapolation of the trend under way, did not take sufficient account of two fundamental mechanisms that regulate the functioning of the economic system : the rebalancing capacity of prices and the endogenous nature of technological change. when the resources used in the production of goods and services become more scarce, an increase in their prices discourages demand and provides an incentive to invest in new production methods that utilize fewer of those resources. although these mechanisms make it particularly difficult to make reliable long - term projections, the fears for ‘ sustainability ’ – that is, the ability to meet current needs without compromising future generations ’ chances of doing the same – have not faded. over the last three decades the biggest concerns have been in relation to the effects of climate change, a factor for which there are no ‘ natural ’ market prices. in 1992, following the earth summit in rio de janeiro, the united nations framework convention on climate change was born, giving rise to the kyoto protocol ( in 1997 ) and the paris agreement ( in 2015 ). in the autumn of that year, robert solow, winner of the nobel prize for economics in 1997 for his contributions to modern theories of economic growth, spoke before an audience of environmentalists, stating that : i do not have to remind you that ‘ sustainability ’ has become a hot topic in the last few years [ … ] as far as i can tell, however, discussion of sustainability has been mainly an occasion for