ignazio visco : the g20 techsprint 2021 on sustainable finance address by mr ignazio visco, governor of the bank of italy, at the g20 techsprint 2021 – presentation event, rome, 7 may 2021. * * * i am very pleased to share with you today the presentation of this year ’ s g20 techsprint initiative. the world is currently facing some very difficult challenges – the attempt to end the pandemic, the effort to eradicate extreme poverty, the fight against climate change – and the g20 is working intensely to address them, by identifying and implementing shared, coordinated and equitable responses. this year italy holds the presidency of the g20 at a time in which the world economy is slowly recovering from the devastating impact of the covid - 19 crisis. the italian presidency aims at addressing this challenge by steering and encouraging global policy makers to strengthen cooperation and step up their efforts to promote a transformative recovery leading to a more inclusive and sustainable economy and society. in order to foster this recovery, both national and international policymakers must pay particular attention to two main factors : technological progress and climate change. the former is rapidly transforming our economies and societies. in the financial sector, in particular, new entrants such as fintech and insurtech companies are shaking up the market with new business models, new processes and products. as a response to these entrants, financial services firms are looking to modern technologies such as machine learning and artificial intelligence to increase automation, deliver cost reductions, increase efficiency and gain a competitive advantage. these technological solutions and the use of digital platforms have lowered entry barriers for alternative payment providers and pose new challenges for existing service providers such as banks or credit card circuits. these rapid changes are also affecting financial regulation and supervision because digitalisation, if left unregulated and insufficiently supervised, may lead to increased vulnerabilities and higher risk of it failures, outages and cyber - attacks. the recent pandemic has accelerated our reliance on technology and we have witnessed the potential of new technologies to provide benefits for consumers, but we have to keep working to contain the risks they may pose. technology can also provide new and intelligent solutions to the other main factor that is transforming the world ’ s economy : climate change. climate change is increasingly affecting individuals in every single country to an extent that is likely to be even greater tomorrow than it is today. it is a global challenge that goes

reason to extremize the results is that the prediction object is a recession in one particular month, rather than the probability of a recession over a period of time. marcelle chauvet and i analyzed this more general problem. 12 our goal was to avoid the problem with the probit model that a constant forecast of, for example, a 25 percent probability that the economy will be in 3 / 6 bis central bankers'speeches recession in 12 months'time implying after one year of such monthly predictions a 97 percent probability the economy would be in a recession in at least one month of the 12. this is similar to the issue i mentioned earlier, where some of the superforecasters appear to have had difficulty calibrating their probability assessments over varying time horizons. such a poor calibration would run afoul of the brier - based scoring system used in the iarpa tournament. 13 it is clear that extremizing the results lessens the impact of the poor calibration on the scoring system, but it leaves open the question of whether a better calibration is possible. another financial market indicator we could look at is the stock market. as paul samuelson famously stated, the stock market has predicted nine of the last five recessions. an alternative statement — and this is also true of yield curve inversions — is that no u. s. recession has occurred since the second world war without a yield curve inversion or stock market correction ( or worse ) proceeding it. as a recent san francisco fed economic letter carefully illustrated, yield curve inversions have the additional record of indicating only one false positive in the u. s., during the mid - 1960s. 14 if we cared equally about forecasting recessions and expansions, these properties would be well - reflected in the brier score ; however, if we view recessions — or more accurately, elevated probabilities of a recession — as more concerning than elevated probabilities of an expansion, then brier scoring is not sufficient. as tetlock writes, " one problem is that brier scores treat false alarms the same as misses. " the issue of asymmetric loss functions over outcomes is well understood by economists, and more recent research around robustness to ambiguity in probability assessments provides more formal methods of " extremizing " probabilities based on loss functions and the level of ambiguity. 15 another issue tetlock raises is that prediction of binary outcomes of clearly stated problems