piero cipollone : welcome address - 6th bank of italy - cepr workshop welcome address by mr piero cipollone, deputy governor of the bank of italy, at the 6th bank of italy - centre for economic policy research ( cepr ) workshop on " labour market policies and institutions ", rome, 18 september 2023. * * * ladies and gentlemen, distinguished guests and colleagues, i welcome you all today to the sixth edition of the workshop on labour market policies and institutions that marks another important building block in the long - lasting and fruitful cooperation between the bank of italy and the cepr. the varied programme, which includes many excellent papers and brings together both well - established and younger labour economists, provides the perfect springboard to comment on the current economic situation and the pivotal role of the labour market. we are in the midst of uncertain times. the strong post - pandemic employment growth may soon come to an end, following the recent slowdown in economic activity in the euro area. inflationary pressures, largely generated by the growth in commodity and intermediate goods prices and by shocks to global value chains, might have reached their peak in the past few months, but there are upside risks to their persistence. despite strong demand for significant wage increases in certain countries, especially those with tight labour markets, overall wage growth has remained relatively modest up to this point, and real wages are still well below pre - pandemic levels. restoring the lost purchasing power should be tied to achieving productivity growth. uncertainty is not only about the short - term outlook. we are facing long - term structural shifts that will affect the functioning of the labour markets and the wellbeing of workers and households in the near future. the transition to a net zero emissions economy, automation, robotics and generative artificial intelligence will affect labour demand and its composition, with potentially significant effects on inequality. an ageing population will exert significant pressure on labour market participation in all advanced economies and will place a substantial burden on the sustainability of public finances due to fewer taxpayers and escalating old - age - related expenditures. the global context is also changing : the rise of new, competing, geopolitical blocs may trigger a process of deglobalization. in times of both short and long - term shocks, we need to make sure we balance the imperatives of economic dynamism with the need to address inequalities and protect vulnerable workers. this is where studying labour market institutions and understanding

##tized pools, spreads of yields on bbb - rated commercial mortgage - backed securities over comparable - maturity swap rates soared, and spreads on aaa - rated tranches of those securities have risen to unprecedented levels. the widening of spreads reportedly reflected heightened concerns regarding the underwriting standards for commercial mortgages over the past few years, but it also may be the result of increased investor wariness regarding structured finance products. cre borrowers that require refinancing in 2008, particularly those with short - term mezzanine loans, will face difficulty in locating new financing under tighter underwriting standards and reduced demand for cre securitizations. in those geographic regions exhibiting particular signs of weakness in real estate markets, for several years we have been focusing our reviews of state member banks and bank holding companies on evaluating growing concentrations in cre. building on this experience, we took a leadership role in the development of interagency guidance addressing cre concentrations, which was issued in 2006. more recently, because weaker housing markets have clearly started to adversely affect the quality of cre loans at the banking organizations that we supervise, we have heightened our supervisory efforts in this segment even more. these efforts include monitoring carefully the impact that lower valuations could have on cre exposures, as well as evaluating the implementation of the interagency guidance on concentrations in cre, particularly at those institutions with exceptionally high cre concentrations or with riskier portfolios. recently, we surveyed our examiners about their assessments of real estate lending practices at a group of state member banks with high concentrations in cre lending. we had two main objectives for this effort. first, we wanted to evaluate the federal reserve's implementation of the interagency cre lending guidance and to determine whether there were any areas in which additional clarification of the guidance would be helpful to our examiners. second, we wanted to assess the degree to which banks were complying with the guidance and gain further information on the degree of deterioration in real estate lending conditions. through this effort, we confirmed that many banks have taken prudent steps to manage their cre concentrations, such as considering their exposures in their capital planning efforts and conducting stress tests of their portfolios. others, however, have not been as effective in their efforts and we have uncovered cases in which interest reserves and extensions of maturities were used to mask problem credits, appraisals had not been updated despite substantial recent changes in local real estate values