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

the bank should hold a significant economic interest until maturity, was almost completely voided ; prudential concerns were overridden by the urgent desire to supply the economy with new credit from new institutions. as currently formulated, the law entails a risk of “ adverse selection ” and “ moral hazard ” : at worst, that is, a bank could foist its most impaired loans on bis central bankers ’ speeches an insurance company and then withdraw from the partnership. to keep this from happening, insurance companies will have to equip themselves adequately to assess the creditworthiness of a business, as if they were themselves banks. this is no easy task : it means having an additional technical unit, specialized in a task that has never been typical of insurance companies. very big companies could possibly do it easily enough, but the smaller ones will be exposed to the danger of being left in the lurch. ivass will have to authorize insurers that want to venture into this business ; it will do so by verifying the presence of technical - organizational arrangements that enable them to form an independent judgement on the loans to be acquired or granted. two days after the decree ’ s conversion into law, ivass held a public consultation on the implementing rules, which can be summed up as follows. the insurance company will have to submit to ivass a business plan that is wholly contemplated within the framework resolution on investment and that contains sufficiently detailed information to enable the authority to make its own evaluation and verify that the criteria set out in the law are met. in these assessments special attention will be paid to the extent and duration of the partner bank ’ s participation. if the insurance company does not intend to avail itself of the support of a bank it must describe the organizational arrangements taken for the screening and monitoring of borrowers and, using best banking practices, demonstrate its ability to understand and manage credit risk. within the macro class of “ loans, ” different investment classes are envisaged, to which specific caps and procedures are applied within the upper limit set by community law ( 5 per cent of the technical provisions ). the criteria introduced by ivass to distinguish between the various classes are, first, the presence and permanence of a partner bank together with a number of requirements relating to the borrower ( credit rating and the certification of the accounts ). the class of securitizations has been broadened to include “ loan securitizations ” which, along with others,