is there a market failure that needs to be corrected? do the fluctuations last long enough to do serious harm? if these movements are predominantly fundamental in nature, attempts to resist them would be largely futile and counterproductive. efforts to dampen speculation through limits on the number of allowable contracts or tighter margin requirements would penalize both good and bad speculation, and potentially handicap the operation of markets. efforts to put ceilings on commodity prices would prevent market clearing and reduce supply. clearly, if anything of this sort is contemplated, it should be done cautiously. president sarkozy, who will chair the g20 leaders ’ summits for the coming year, has put reform of the commodity derivative market near the top of his agenda. however, he has also underscored the need for a more thoroughgoing review before any action is undertaken. various supervisory and regulatory agencies have also called for greater oversight of commodity exchanges, and recently enacted legislation for financial sector reform in the united states has proposed that new limits be put on speculative trading in a number of commodities. this work, however, is still at a very early stage. less - controversial measures have also been proposed, which both fundamentalists and market skeptics can support. the first is a call for greater transparency and information sharing with regard to commodity supply and demand. lack of timely and comprehensive the impact on spot prices of investment in commodities is more direct in the case of commodity index funds that are physically backed by the underlying commodities. these investment products are, however, limited to commodities that can be stored ( metals, for example ). care must be exercised in interpreting these results, however, since the relationship between spot and forward prices, and between prices and inventories, also depends importantly on how price expectations are formed. bis central bankers ’ speeches data hampers the functioning of both the physical and financial commodities markets. recent work in the oil market, under the auspices of the joint oil data initiative ( jodi ), is serving as a useful template for these efforts. improved information should help stabilize markets and work to everyone ’ s benefit, except perhaps those who profit from asymmetric information and possible manipulation of the present system. the second set of reforms focuses specifically on transparency in the over - thecounter ( otc ) derivatives markets and is part of a much larger initiative launched by the financial stability board to enhance financial market infrastructure. the third set of reforms targets the things that several governments do, either intentionally or unwittingly,

, dating from 2013 and 2014 respectively ; for the european union as a whole, we have crd iv ( the capital requirements directive ), followed by the crr ( capital requirements regulation ), both from 2013 ; finally, there is the brrd ( banking recovery and resolution directive ), from 2014, and the dgsd ( deposit guarantee schemes directive ), also dated 2014. several of these acts are still being revised and refined. on the question of banking resolution, a vital component in the overall project for banking union, the european commission ’ s july 2013 communication updated its own earlier interpretation of the rules on state aid in the banking sector. taken together, the brrd, dgsd and this communication have played an important role in the case of the failing italian banks that were wound up, placed under resolution or sold to other banks. banking union makes sense if markets and investors believe that europe ’ s banks are european first and foremost, and only then italian, german or french. it follows that if a bank is in difficulty, it must be a matter for europe, not just for the country in which that bank is headquartered. this implies the sharing of risks, both at private and public level, a concept that many countries have yet to accept. for several good reasons, i might add. however, one point must be clear : banks run many risks that have to do with how they are managed, but they also share with the state in which they are established – and whose government bonds they hold in their portfolios – what is commonly termed sovereign risk. in the euro area today this is a reflection not only of idiosyncratic factors in that state, but also of the possibility – which the markets continue to entertain, though much less than in 2011 – of a euro break - up and the redenomination of credits into renascent national currencies. this element of risk must be eliminated by driving the message home at every opportunity : whatever happens, the euro will endure. proceeding with banking union necessarily implies sharing banking risks : all countries must work to make this a reality. the problems besetting the ‘ business of banking ’ today what problems do italian banks face today, now that the fall - out from the crisis, specifically the ratio of non - performing loans, is slowly diminishing? essentially, our banks generate too little profit, even excluding the cost of bad loans. to understand why, it helps to look at what has happened internationally. over