ignazio visco : creating job, eradicating poverty and achieving sustainable prosperity statement by mr ignazio visco, governor of the bank of italy, on behalf of the constituency representing albania, greece, italy, malta, portugal, san marino and timor - leste, to the development committee, tokyo, 13 october 2012. * 1. * * creating jobs for development : a challenge for all countries according to the ilo ’ s latest estimates for 2012, the global number of unemployed is 200 million, about 30 million more than in 2007. at the same time, the share of the working age population with a job declined to an estimated 60. 3 per cent in 2012 from 61. 2 per cent in 2007. this scenario is projected to remain mostly unchanged in the coming years and can even turn out to be optimistic should some of the downward risks materialize. thus, the world development report ( wdr ) 2013 on jobs recently published and its companion paper “ creating jobs for development : policy directions from the 2013 world development report on jobs ” are timely in addressing one of the most pressing problems for many policy makers around the world. they also offer an opportunity to refocus the attention of the bank on its original mandate of eradicating poverty and boosting prosperity. jobs and especially good jobs, are the main avenue to achieve both goals. as the wdr 2013 states, it is for the private sector to create economically and socially sustainable jobs, and for the government to provide a stable macroeconomic environment, an investment friendly business climate, a solid rule of law and a balanced labor market regulation. policies and interventions will need to be tailored to each country ’ s initial conditions, based on the diagnosis of the constraints to job creation. 2. the knowledge bank : implications for the business model the strategy that aims at eradicating absolute poverty in poor countries and achieving sustainable and inclusive prosperity in middle income countries deserves support. financial resources need to be directed with priority towards countries that do not have access to the market at a reasonable cost. on the contrary, about 50 per cent of the overall ibrd exposure is currently to countries with per capita income above 2, 900 us dollars, and 30 per cent is to countries that can borrow from the market at a spread of no more than 150 basis points over the corresponding us treasury. redirecting financial resources to the least developed countries cannot imply that the wbg ceases to serve middle income countries. the wbg needs to define a

against eurobonds and simple fiscal unification, but with the european stability mechanism and the planned banking union we are effectively creating something like common fiscal liabilities and common bonds, just with less transparency. arguably, the german mark was – from a monetary point of view – a rather well administered pan - european public good. after the euro, this public good became overconsumed. philipp bis central bankers ’ speeches bagus, sitting today here in this room, argues that the euro is a classical example of a “ tragedy of the commons ” from the start, and that the smaller and weaker countries therefore inevitably ended up racing to make maximum use of the commons for their own benefit at the expense of the rest, thereby destroying this shared asset. the german mark can indeed be viewed as a sort of public good that became the subject of decisions made outside the public sphere in germany and hence was fundamentally transformed. the average quality of the public good called monetary stability and good currency in the eurozone will very probably go down with the ultimate demise of the former european monetary hegemon. let that be a warning to those countries which have not yet signed up to the monetary integration project. the fall of the former hegemon is relevant not only for the current crisis, but also for the future of the monetary order in europe. and here i do not see any positive perspectives, i must bitterly admit. i am not saying that the euro has to collapse, but i am pretty sure that if it prevails, it will be a completely different currency implying completely different monetary conditions from what the germans in particular hoped for. and germany faces a tough choice – further integration or a perfect monetary order. this question is rather new and painful. the answer to it will influence all of us, i believe. so let ’ s wish them good luck. thank you for your kind attention. bis central bankers ’ speeches