ignazio visco : an overview of the work of the g20 under the italian presidency remarks by mr ignazio visco, governor of the bank of italy, at the singapore fintech festival, virtual, 10 november 2021. * * * i would like to thank ravi menon for his kind invitation to this fintech festival and the staff of the monetary authority of singapore for their very helpful assistance. in these remarks, i will provide a brief overview of the work and the main results achieved this year by the group of twenty ( g20 ) under the italian presidency, with special reference to its finance track. italy took up the g20 presidency at a critical time, not only due to the pandemic, but also because multilateralism had suffered major setbacks in previous years. this bout of inwardorientation in economic relations is perhaps best exemplified by the trade tensions between the united states and china, but is certainly not limited to this, with brexit being another important example. this “ crisis of multilateralism ” has its deepest roots in the prolonged inattention given to the side effects of globalisation and technological progress. these phenomena, despite their positive impact on welfare and their contribution to the reduction of cross - country inequalities, have caused significant losses for segments of populations, not least within advanced economies, that were unprepared for these changes and found themselves unprotected during the process. the start of our g20 presidency in december 2020 also coincided with the transitioning to the new administration in the united states. since then, multilateral dialogue has been reignited across many dimensions and this momentum has positively impacted our g20 presidency, facilitating the achievement of several important results. the key challenges that all our economies are currently facing continue to be related to the pandemic and to its direct and indirect consequences. this is the main reason why many people have been pushed into poverty, unemployment has increased, and both public and private debt have risen. the unequal distribution of vaccines in all regions, especially in the least developed ones, remains a major risk factor for the global economy. in order to help the weakest economies address the health crisis, debt service payments for 50 countries have been suspended since 2020, and the italian presidency has succeeded in extending this provision until the end of this year. moreover, a consensus has been reached for a general allocation of special drawing rights by the imf ( for 650 billion dollars ), which will allow low

most emerging markets at this time, the most serious external risk is the challenges posed by large and persistent capital inflows. the first challenge involves a macroeconomic dilemma that centres around the tension between appreciation pressures, inflation dynamics, and growth prospects. the second stems from financial stability concerns associated with potential build - ups of macroeconomic imbalances, risk of asset price bubbles, and the possibility of an abrupt reversal of inflows. in the past, as we all know, reversals of capital have trigged serious debt defaults, banking distress, and currency crises. so, with the nature of risk becoming more external, the abilities of central banks to respond effectively to the new challenge based on domestic measures will be limited. this calls for a reconsideration of policy coordination, both in the context of within - country coordination, and cross - country coordination. the third implication from the global crisis is the heightened expectation and trust that the public now has on central banks, as guardian of stability, to do its utmost to avoid financial crisis, and to do it professionally and independently. in the west, the current crisis has diminished public trust on the roles of government and financial institutions in safeguarding and upholding public interest. to this end, central bank independence is seen as an important pre - condition for ensuring safety, continuity, and stability. this is a challenge that central banks will need to recognize in performing their duties. so, given this backdrop, challenges facing central banks going forward will be more demanding. and to meet these challenges, central banks will need to be thinking clearly on at least two issues. the first is the right policy framework to respond to the challenge. in the case of monetary policy, from our experience here in thailand, combining inflation - targeting with macroprudential measures under a flexible exchange rate regime has proven to be a good workable policy framework for meeting the challenge posed by the dual mandate of maintaining price and financial stability. nonetheless, in an environment of large and persistent capital flows, having the right policy framework alone may not be adequate. monetary policy will need to be supported by and coordinated with other policies to ensure the best outcome. for example, well - aligned fiscal and monetary policy is important at a time of strong capital inflows to help moderate the adverse impact of capital flows on domestic demand. this means fiscal policy will need to be less procyclical as domestic interest rates rise. next, deeper and more diverse local financial markets will help lessen