ignazio visco : statement - meeting of the development committee statement by mr ignazio visco, governor of the bank of italy and governor of the constituency of albania, greece, italy, malta, portugal, san marino and timor - leste, at the 108th meeting of the development committee ( joint ministerial committee of the boards of governors of the bank and the fund on the transfer of real resources to developing countries ), marrakech, 12 october 2023. * * * the world bank ( wb ) and international monetary fund ( imf ) annual meetings come at a poignant time for northern africa. the damages and the human toll of the earthquake here in morocco and the catastrophic floods in libya bring renewed attention to the need to enhance resilience to extreme natural events. our most sincere condolences go to the many thousands who have been injured and displaced. we remain inspired by the people of ukraine, who continue to face the russian aggression with courage and determination, and we express our steadfast support to the state of israel and our unequivocal condemnation of hamas'appalling and vile acts of terrorism. the global macroeconomic outlook is weak and highly uncertain. global growth will slow markedly in 2023 and 2024 and risks are clearly tilted to the downside, reflecting not only loss of momentum in some areas, but also the possibility that climate shocks and geopolitical tensions could trigger additional food and energy price increases. meanwhile, inflation is still elevated, though somewhat abating. most emerging and developing economies remain highly vulnerable to global risks. in this context, the actions of the multilateral system and the international financial institutions are key to providing swift support to the most vulnerable, building inclusive and resilient economies, and generating sustainable growth. we therefore welcome the document " ending poverty on a livable planet : report to governors on world bank evolution " and commend management, staff and the board of directors for the significant progress made since last april. the direction is clear, the plan ambitious, and the commitment to the reform agenda visibly strong. this needs to continue. we will maintain our support for this work over the coming months with a constructive approach and look forward to further progress by the 2024 spring meetings. we agree with the proposed vision and mission, which retain the twin goals – eradicating extreme poverty and boosting shared prosperity – while stressing the importance of addressing global challenges. most importantly, this acknowledges that the fight against extreme poverty

stability, coordination and governance which establishes a comprehensive new “ fiscal compact ” including a requirement for national structural deficit not to exceed 0. 5 % of gdp. these new rules must now be fully implemented by each country. – besides, europe has equipped itself with an instrument to combat crises. at the last european council meetings, it was decided to bring forward the creation of the permanent european stability mechanism ( esm ) to july 2012, and to make it more powerful, increasing the lending capacity of the esm to usd 1 trillion. it is absolutely necessary that this strong tool becomes fully operational as soon as possible. i believe that there is another very important reason why the euro area has been so badly hit by the crisis ; it is because we are a very highly integrated economic area but do not have the appropriate institutional mechanisms for this integration. in particular, this explains the contagion effects and the negative feedback loops between banks and states, which have made matters much worse in the area. obviously, a good and coherent functioning of the banking sector is absolutely vital for an overall solution to the euro area crisis. this conviction is based on two fundamental observations : – appropriate financing is essential for our economies to achieve strong and sustainable growth. in europe, the banking system is the main source of financing, and hence its strength is of crucial importance. however, financial markets naturally also play a key role and they should focus on serving the economy. bis central bankers ’ speeches – secondly, financial stability is critical not just for creating the right conditions for the appropriate financing of the economy. it is also an extremely valuable asset in fostering confidence, which has been severely lacking in recent years and is another key condition for growth. it is also a vital condition for the effectiveness of monetary policy as it allows the normal functioning of transmission mechanisms. in addition, given the feedback loop between banks and sovereigns and the potential impact of a financial crisis on a country ’ s fiscal position, financial stability makes a major contribution to fiscal stability. a smooth functioning of the banking sector is therefore clearly an essential element in the resolution of europe ’ s problems. as a central banker and supervisor, i see three major tools which can help to ensure appropriate financing of the economy and financial stability – both of which are essential financial conditions for sustainable growth. 1. financial regulation and supervision must be tailored to the two objectives of strengthening the financial sector while ensuring an appropriate financing of the economy. of course, after the 2008 financial crisis, the most urgent priority