country. the upcoming strategy for fragility conflict and violence will be a litmus test of wbg engagement in the most challenging environment. several countries, particularly in africa, are experiencing a severe deterioration in both domestic and external debt, which may undermine their progress in economic and social development. we welcome the review of the non - concessional borrowing policy which highlights the weaknesses of current policies and identifies relevant areas for improvement. we expect that the forthcoming sustainable debt financing policy will be inspired by a rigorous rule - based but non - punitive approach whose underlying principles we fully endorse. we welcome the world development report 2020, “ trading for development in the age of the global value chains ( gvcs ). ” it is well balanced in identifying the sources of the potential threat posed by protectionism. gvcs are indeed more powerful in supporting growth than standard trade and, notwithstanding the diffusion of labor - saving technologies, can continue to boost growth. the report rightly recognizes that with rapid technological change and increasingly complex production arrangements, broad - based structural policies — e. g., skill formation and other policies designed to ensure participation in gvcs — provide the highest payoff in enhancing countries ’ competitiveness in international markets. a country ’ s openness — to trade as well as international investments — tends to magnify the benefits of supply - side policies. the success of such a country will then depend even more on its endowment of “ immobile factors of production, ” such as the quality of infrastructures, the bureaucratic and legal context, the efficiency of the financial system, and human capital. old - fashioned protectionist policies are short - sighted and, at best, ineffective in preserving comparative advantages. they represent the wrong answer to a legitimate demand for political action from those who have suffered the most from the negative consequences of structural transformations. to tackle these critical issues it is necessary to share the gains of economic integration. in particular, it is indispensable to reinforce the adjustment mechanisms and redistribution policies that can reduce the social burden of structural transformations, especially among the most disadvantaged. these include policies that favor labor mobility, while ensuring an adequate social safety net, along with income support for displaced workers that does not discourage labor market participation and foster poverty traps. to address beyond - the - border challenges to gvc participation, as well as enhance support for regional integration, the wbg should devote more attention to trade policy. for instance, helping countries maximize the benefits of the african

##ries ’ freedom of action and enhance the flexibility of the banking system. the key criterion is the evaluation of the different forms of risk using common quantitative methods, together with a more accurate correlation between capital requirements and the size of the risks faced. the new rules for assessing the capital and organizational adequacy of banks are based on their own methodologies. the bank of italy ’ s task is to verify the reliability and rigour of the methods used and, if necessary, to require corrections and improvements. there will be a more intense interaction between the supervisory authority and the banks, but the regulatory formalities will be reduced. the widespread dissemination of the methods for calculating capital requirements developed by each of the leading banks has made adequate techniques available to a wide range of intermediaries, in some cases through participation in consortiums. however, the most advanced calculation methods will initially be used only by some of the major groups. the market will comprise banks applying credit assessment methodologies of varying complexity. the bank of italy is committed to checking that the use of different methods of customer selection does not lead to regulatory arbitrage or adverse selection. the risk - weighting system and the special treatment reserved for small loans mean that the new rules will not result in credit rationing or higher costs for smaller firms. by increasing the role of flexible and market - oriented supervisory instruments and reducing that of detailed administrative prescriptions, the new regulatory system enhances the role and effectiveness of on - site and prudential supervision. again with the aim of directing finance toward stimulating renewed economic growth, the bank of italy intends to submit a proposal for revising the regulation of banks ’ equity interests in non - financial corporations to the interministerial committee for credit and savings. the rules would be fully aligned with community law by easing the present stringent constraints while introducing rigorous codes of corporate governance in order to safeguard intermediaries ’ stability and ensure the transparent and correct handling of conflicts of interest. as regards the authorization of acquisitions of controlling interests in banks, the obligation to notify plans to the bank of italy before they have been submitted to the board of directors will be abolished. driven by the single currency and progressive regulatory harmonization, the integration of european banking markets derives additional momentum from developments in the competitive environment. the growth of consumer credit and, more generally, of financial products for households contributes in this respect. such products are becoming increasingly standardized in design and in the technology used, which encourages their large - scale distribution and