to counter the market power of foreign tech giants. a common response these lines of intervention do not cover all the fields in which the eu is called to act. there is a need for common policies when it comes to the environment, defence, immigration, and education and training, for instance. banca d ’ italia the governor ’ s concluding remarks annual report 2023 this will require substantial resources : the european commission estimates that over €800 billion in public and private investment will be needed annually until 2030 to sustain the climate and digital transitions and to raise military spending to 2 per cent of gdp. 4 for individual nations to embark on such a vast plan would entail a duplication of spending and sacrificing the achievement of economies of scale. the fiscal capacity of many countries would be a limit and would risk compromising the endeavour, which has to be broad in scope, and would also risk increasing the fragmentation of the single market. since many of these projects address common public goods such as the environment and external security, insufficient expenditure would be to the detriment of all eu countries and citizens. it is therefore necessary, in everyone ’ s interest, to act on these initiatives at european level. completing the european economic architecture the european economic architecture lacks two essential ingredients : a common fiscal policy and an integrated capital market. the banking union remains incomplete. with a fully complete economic architecture, europe could have been better able to weather the crises of the last fifteen years. there is a pressing need to address these issues in light of the current unstable geopolitical environment and of the huge investments that europe has to make. the new fiscal framework in a monetary union, a central budget has two main functions : to finance shared public goods and to respond to cyclical fluctuations, both by smoothing out their impact over time – which can also be done at national level, to some extent – and by offsetting the effects of asymmetric shocks across countries. a european budget would allow us to take a fiscal stance that fits the area as a whole, rather than being the mere sum of national policies. it would help us cope better with strong and long - lasting shocks, such as the pandemic or the energy crisis, making fiscal policy consistent with monetary policy. the recent reform of european economic governance has not resulted in significant progress in these directions, nor has it streamlined the rules as necessary. without any progress towards a common fiscal policy, any reform the governor ’ s concluding remarks annual report 2023

. since 2010, foreign direct investment has also stagnated at global level. in recent years, there has been a decline in flows between blocs of politically distant countries and a marginalization of the poorest countries. in the international monetary system, the role of the different currencies and that of the payment and market infrastructures has taken on a strategic importance that goes well beyond the purely economic sphere, particularly after sanctions were imposed on russia. the dollar and the euro are still the main reserve currencies. the chinese renminbi is rapidly growing in importance, however, as its increasing use for cross - border payments and commercial transactions shows. some central banks are also adjusting the composition of their reserves, reducing their holdings of the major currencies in favour of gold, partly in response to sanctions. the future moves on this front by the major economies will need to be assessed in light of the possible repercussions on the global monetary system. international political tensions have heightened the focus on the risks linked to reliance on long and complex global production chains, which had already emerged during the pandemic. the governments of many of the advanced countries have become reluctant to depend economically on countries perceived as unreliable from a geopolitical standpoint. they have taken steps to achieve autonomy in strategic manufacturing sectors and to diversify the supply chains for critical resources such as agricultural, energy and technological goods. these measures have frequently taken the form of protectionist policies : the number of trade restrictions introduced in 2023 was three times higher than in 2019 ( figure 1 ). firms are reviewing their strategies, with a view to reorganizing on a national or regional basis the activities that were carried out on a global scale in the past, and to diversifying their sources of supply. surveys conducted by banca d ’ italia with other central banks show that many european manufacturing firms are replacing their chinese suppliers with eu - based ones. the governor ’ s concluding remarks annual report 2023 banca d ’ italia figure 1 new trade restrictions imposed at global level ( number of restrictions ) 3, 000 3, 000 2, 000 2, 000 1, 000 1, 000'09'10'11'12'13'14'15 investment'16'17 goods'18'19'20'21'22'23 services source : global trade alert. ( 1 ) unilateral changes in the relative treatment of foreign versus domestic commercial interests, with reference to both trade flows and foreign direct