mario draghi : 2006 world savings day address by mr mario draghi, governor of the bank of italy, on the occasion of the 2006 world savings day, at the association of italian savings banks ( acri ), rome, 31 october 2006. * 1. * * savings and investment half a century ago, when italy was moving towards prosperity, it was the parsimony of its population that financed economic growth. right up to the mid - 1970s, while expenditure on investment amounted to 26 per cent of gross national disposable income, private saving exceeded 30 per cent, with more than two - thirds of it due to households ; their thrift was encouraged and upheld as a social virtue. towards the end of the twentieth century, both expenditure on capital goods and private saving diminished to around 20 per cent of national income ; household saving dropped below 9 per cent. since then, italian households have started to save again, partly in response to the public pension reforms of the 1990s ; they continue to be among the thriftiest of the developed countries. with no more barriers to capital movements and a globalized financial market, savings worldwide are now in search of investment opportunities, wherever they may arise. the link between saving and investment is no longer related to national borders. only a growing country will attract capital, from both within and without. italy ’ s weak economic growth in the past ten years has been aggravated by inadequate investment, not so much in terms of quantity as of quality and composition. the technological component of real assets, human capital and organizational structure are of growing importance. if the present recovery is to last, economic policy and the financial system must support the restructuring of production, channelling savings towards innovative investment. 2. returning to growth 2006 is about to become another year of record growth in world output. since the summer there have been increasingly clear signs of slower growth in the united states, where the lengthy property boom appears to be coming to an end. world demand may be affected by the slowdown, but it continues to be fuelled by the exceptional growth of the asian economies. economic growth in the euro area is considerably stronger now than in the previous months. the momentum could be lessened over the next quarters by the decline in demand in the united states and the need for some of the main euro - area countries to consolidate their public finances. in italy, too, gdp growth resumed at a rapid pace in the first half of this year. industrial production recorded an estimated year -

effects on systemic risk and growth, ” economic policy 31 ( 2016 ), 51 - 106. savings favours participation in capital markets7 and there is evidence that institutional investors have positive effects on corporate governance. 8 a look at the development of institutional investors in advanced economies highlights the challenges ahead. countries in continental europe continue to lag behind the uk and the us. the gap is all the more serious in the pension funds sector, reflecting the relative weight of funded retirement schemes in national social security systems. the gap is very noticeable in italy. for example, in 2015 the assets managed by pension funds accounted for less than 10 per cent of gdp in italy, compared with more than 100 per cent on average in the uk and the us. we definitely need to attain a more comprehensive understanding of the underdevelopment of institutional investors in most euro - area countries. for all of these reasons, policymakers look favourably at the development of market - based financing and the growth of institutional investors. it must be stressed, however, that banks and market - based finance remain complementary, rather than substituting one another, and that a level playing field should be ensured for all financial intermediaries. if regulatory changes put banks at a disadvantage, firms may end up having difficulties accessing both bank and non - bank forms of external finance. indeed, apart from remaining a vital source of corporate funding, especially for smes, banks are uniquely equipped to help firms to access the capital market. moreover, banks offer contracts ( such as overdrafts or credit lines ) and services ( such as lending assistance ) that are often complementary to market - based finance. these contracts and services can be helpful to firms, especially in periods of distress. 9 * * * to conclude, the corporate sector would greatly benefit from a more developed market - based segment within our financial systems. institutional investors play a pivotal role in this structural evolution. at the european scharfstain, d. s., “ presidential address : pension policy and the financial system, ” the journal of finance, 73 ( 2018 ), 1463 – 1512. mccahery j. a., z. sautner and l. t. starks, “ behind the scenes : the corporate governance preferences of institutional investors, ” the journal of finance, 71 ( 2016 ), 2905 – 2932. bolton, p., x. freixas, l. gambacorta and p. e. mistru