welcome address luigi federico signorini senior deputy governor of the bank of italy programme for strengthening the central bank capacities in the western balkans with a view to the integration to the european system of central banks. phase ii project launch event rome, 21 september 2022 ladies and gentlemen, it is my pleasure to welcome you to rome and to the bank of italy for the second eu - financed project of technical cooperation between the central banks of the escb and the western balkans. we are delighted to host the kick - off meeting of this new programme, and the first meeting of its steering committee. not only because of geographical proximity, italy has always had strong cultural, economic and financial ties with the western balkans, their peoples and their institutions. at the bank of italy, we believe in cooperation among institutions and countries, and in promoting institutional dialogue, in line with the key values of peace, liberty, democracy and the rule of law on which the european identity is based. through institution building, people who share these aims can meet and exchange ideas, experience and knowledge. this is particularly necessary in times of crisis. we are witnessing right now something we had not seen for a long time and thought, or hoped, was no longer possible : war in europe, again. crises, in fact, have always left european institutions stronger in the end. each of the crises that have hit europe, like much of the world, since 2008 ( the international financial crisis, the sovereign debt crisis, the covid - 19 pandemic, now russia ’ s aggression towards ukraine ) has sparked common responses. the escb has done its part. difficult times also tend, if anything, to reinforce the union ’ s desire to deepen its ties with neighbouring european countries, with a view to eventual integration. the launch of this project allows us to strengthen our long - lasting commitment to the western balkans. many of the escb ’ s central banks are taking part in this initiative. the support of the european union is fundamental ; the fact that this project is set in the wider framework of eu accession makes it particularly significant. in the last few years, the bank of italy has taken part in several cooperation projects aimed at the western balkans. this has included single - country initiatives, such as the twinning programmes with the bank of albania, and the regional escb programme we are discussing today. in phase i, as you are surely aware, we organised several training events ( on banking supervision, payment systems and monetary policy ) and

the decision taken by the ecb for significant banks, allowed all supervised entities to operate temporarily below the level of the pillar 2 guidance, the capital conservation buffer and the lcr. the esrb has issued a recommendation that the relevant authorities request financial institutions under their supervisory remit to refrain from paying dividends, buying back shares and paying variable compensation until at least january 2021. there is a case, therefore, for building up safeguards against moral hazard and excessive build - up of risks in markets. we need to reflect, among other things, on a macroprudential framework for non - bank finance. while basel iii comprehensively redesigned the regulatory framework for banks, change has come more slowly to nonbank financial institutions ( nbfis ), especially asset managers, despite the increased size, concentration, interconnectedness and speed of action of the industry. the awareness is growing that nbfi risks involve externalities. with no ‘ basel accord ’ for non - banks, there is enough regulatory variation across jurisdictions to allow for reflection on what worked best, or is likely to work best, in managing market stress and avoiding endogenous amplification of shocks. in the past few years, the first fsb and iosco recommendations on liquidity and leverage in asset management have opened the way ; work on this should continue. an aside on the gold holdings of central banks – answer to a question from the audience. there are historical reasons behind central banks ’ large holdings of gold – a relic, whether ‘ barbarous ’ or otherwise, of the times when gold was the official basis for the international monetary order. there is also an aura of solidity around gold, an instinctive idea that it can be a safe haven in the event of extreme disruptions. there are, in fact, also eminently rational, tecnical reasons to keep gold as part of a central bank ’ s assets. portfolio diversification is essential for central banks ’ long - run financial soundness and thus, ultimately, for their independence. some diversification between ‘ paper ’ assets ( if you will allow me this expression in a paperless world ) and a commodity, specifically one that people often turn to in troubled times, does make sense. according to the escb ’ s accounting rules, capital gains on gold reserves are not recorded in the profits and loss account, but they do show up in the overall capital position and, in this way, they contribute to the balance - sheet coverage of the bank