the blame for the crisis. but because of never redressed structural weaknesses italy was overwhelmed by it, penalized more than others, to the point that today, owing to its slowness in overcoming its own crisis, italy itself has become a cause of general crisis. nevertheless, the gravity and complexity of the situation must not make us forget our strengths. the first of these is our head of state, whom i wish to thank both personally as a citizen and institutionally on behalf of the bank of italy. he is a beacon, an inspiration, an example. the second strength comes from looking back on what has been accomplished. in these six years we have done a great deal. the bank of italy has made outstanding contributions at domestic and international level to the efforts to cope with the crisis, to revamping supervisory action, to the design and management of european monetary policy, to the formulation and implementation of the reform of european and global regulation. the autonomy of the bank of italy has been essential for all this. the bank ’ s autonomy is not an end in itself. it is an essential element of the way in which the bank exercises the powers and performs the duties defined in its statute, the italian constitution and the european treaty. in exercising these powers, the bank is called upon to safeguard the common good, for it is always perceived as impartial and not subject to external controls or interventions. the general council does not represent private interests ; it does not intervene in matters for which the bank or its top management is alone responsible ; it oversees the bank ’ s administration, its management and its choices. i now take leave of the bank with a peaceful mind, with, i believe, your warm feelings that will accompany me to frankfurt. the new governor epitomizes all the best that the bank has produced in its tradition of training authentic central bankers. the bank ’ s organization is sound and strong. but you too – italy ’ s banking foundations and banking system – have done much in these years to cope with the crisis by increasing resources, making sacrifices, changing operating rules, and aligning incentives with results, and you deserve ample credit for this. bis central bankers ’ speeches it is, then, from the strength of some of our institutions, from the awareness that we have succeeded in accomplishing things that seemed impossible, that we draw courage, security, the belief we will succeed. but we are experiencing a historical discontinuity. we are moving towards a new european pact,

day liquidity management impaired signalling of the monetary policy stance. • the situation is more problematic on longer money market maturities, where a substantial premium on official rates has emerged. central bank interventions have been effective in avoiding market disruptions, but they could not address the lack of disclosure underlying these tensions, resolution of which requires additional information of the size and distribution of exposures, an assessment of the impact on banks ’ balance sheets, and the completion of the process of risk repricing. all in all, by their prompt interventions the central banks were able to preserve orderly market conditions and avert a liquidity crisis, without endangering the markets ’ medium - term expectations in a period of volatility and generalized uncertainty. 4. 2. strengthening the foundations of the financial system the ongoing financial turbulence has not come as a surprise. for some time the supervisory authorities had been emphasizing the increasing strains, stressing the rise in sub - prime mortgage defaults in the united states and warning that investors ’ perception of risk might have changed suddenly, leading to abrupt portfolio adjustment and destabilizing effects. but the interaction between the difficulty to value sf products, the evaporation of liquidity and the “ rush to exit ” to reduce risk exposure could not have been foreseen, and nor could the speed at which the crisis spread across institutions and markets. to tackle the fragilities highlighted by the current turbulence, the financial community has put a number of initiatives in place in recent months. in particular : • at the request of the group of seven, the financial stability forum ( fsf ) is reviewing several important issues such as the management of risks – especially liquidity risk – by the institutions subject to regulation, the appropriateness of capital requirements, the full consolidation of the assets and liabilities currently kept off banks ’ balance sheets, and the transparency and valuation of structured financial products. • the eu finance ministers have asked the economic and financial committee to examine a number of issues raised by the recent turbulence, analysing them in a way that is complementary to the mandate of the fsf by taking a european perspective and covering slightly different areas, including the implications of the new capital requirements directive, which implements the basel 2 framework in the european union. in fact, it was not properly anticipated that commercial banks could be the weak link in the system : other financial institutions, hedge funds first of all, were thought to be more likely candidates to set off a crisis. to some extent, the