salvatore rossi : post - crisis challenges to central bank independence speech by mr salvatore rossi, deputy governor of the bank of italy, at the lbma / lppm precious metals conference 2013, rome, 30 september 2013. * * * first, let me thank the london bullion market association and the organizers of this conference for their invitation to take part in such an important event. i was asked to speak about “ post - crisis challenges to central bank independence ”. this is certainly a key issue, especially in these particular days. my speech will draw on some of the recent work of my colleagues at the bank of italy, and in particular from franco passacantando ’ s remarks at the world bank last april on a similar topic. 1 central bank independence yesterday and today2 over the past two centuries reflection on the nature of central banks has been incessant, proceeding hand - in - hand with the spread of these peculiar institutions. today, nearly every country has a central bank, but scholarly opinions still differ over the actual needs that central banks were intended to address. whatever these needs and whatever the circumstances, however, independence has been almost universally considered as the economic and legal heart of central banking. the idea that paper money must be issued by an institution that is independent and distinct from the sovereign is an ancient one : explicit and still highly topical passages were penned two centuries ago by henry thornton and david ricardo. though contested occasionally by advocates of all - embracing political sovereignty, this idea became rooted in economic thought and was incorporated, in varying ways and to varying extent, in the statutes of many central banks. in the 1980s monetary theory “ rediscovered ” the independence of central banks. economists, politicians and ordinary citizens had been frightened by the inflation of the 1970s, and also highly impressed by the differing ability of the leading countries to quell it. a special strain of economic literature emerged as part of the broader theoretical school of “ new classical macroeconomics ” associated with robert lucas and thomas sargent. it was based on the concept of “ time consistency ” of economic policy, i. e. the idea that if a policy is to be credible in the eyes of private agents with rational expectations, it must be consistent over time. since policy - makers may have incentives to deviate from their policies, some sort of institutional straitjacket is required to constrain them to time consistency. the theory quickly came to be applied to monetary policy. it was argued that the only way to prevent policy - makers from

antonio fazio : welcome address for the euro - mediterranean seminar welcoming address by mr antonio fazio, governor of the bank of italy, at the euro - mediterranean seminar, eurosystem and mediterranean country national central banks, organised by the bank of italy and the european central bank, naples, 14 - 15 january 2004. * * * the twelve mediterranean countries of africa, the middle east and europe represented here by the governors of their respective central banks are members of the euro - mediterranean partnership. they are morocco, algeria, tunisia, egypt, israel, the palestinian national authority, jordan, lebanon, syria, turkey, malta and cyprus. they are joined by libya in the capacity of observer. the partnership between the european union and the mediterranean countries began in 1995 with the barcelona conference ; it should lead, in 2010, to the creation of an area of free trade in goods and services. the signatories to the agreement have undertaken, in particular, to allow the reciprocal establishment of enterprises and to promote flows of direct investment in the less advanced economies. the commitments entered into at barcelona have been followed by bilateral association agreements between the european union and nearly all the mediterranean countries, including measures to liberalize trade in manufactures as agreed during the uruguay round. the gross domestic product of these mediterranean countries is equal to 10 per cent of that of the euro area. they have a population of 250 million people, which is growing at an annual rate of 1. 8 per cent ; young people below 15 years of age are 33 per cent of the total. the european union has a population of 380 million ; the proportion of young people under 15 is only 17 per cent. the proportion of over - 65 year - olds is 16 per cent and is destined to rise substantially in the decades to come. the present birth rate is extremely low, only slightly higher than the death rate. according to un estimates, by 2015 europe ’ s population will have grown by 5 million, that of the mediterranean countries by 60 million. the per capita gdp of the twelve countries is showing a tendency to rise, albeit slowly ; it still averages only 11 per cent of the figure for europe. some years ago the bank of italy began a study of the economies of north africa and the near east. the geographical proximity and already significant commercial ties with these countries, the migratory movements, and the prospect of financial integration prompted us, within the eurosystem, to undertake a more systematic analysis of the scope for their development, which is of great importance