ideas for improving the structure of the markets. the bank of italy has constantly used the econometric model since then as a logical frame of reference and a tool for knowing some fundamental parameters of the italian economy. we used the model in intense discussions with the international monetary fund in order to design and define the parameters of the policy to stabilize the italian economy in 1974 in the wake of the first oil crisis. this had caused an enormous imbalance in the external accounts and a surge in inflation, which was followed by a wage explosion due in part to the indexation of wages to prices. the success of the policy of credit restriction was immediate, thanks also to the resoluteness with which governor guido carli implemented it. inappropriate budget policies created new imbalances in the following years. we used the model and its parameters again to define, under governor paolo baffi, the stabilization policy of 1977 - 78 carried out by the government led by giulio andreotti. the budget correction amounted to 5 per cent of gdp. the positive effects on the external accounts came through within a year. over a span of thirty years franco modigliani ’ s analyses, his diagnosis of the ills of our economy and the suggested cures, encompassed manifold subjects, from the labour market to the problems of retirement provision. he was motivated by the desire to penetrate the reality of the italian economy in order to correct its malfunctions, increase efficiency and expand employment. his interventions, above partisan interests, were always highly appreciated by governors carli, baffi and ciampi. 3. modigliani and economic policy in the 1960s, the dominance of keynesian economics was uncontested. milton friedman proposed an alternative line of thought, but his ideas were not considered, save to dismiss them out of hand. but not by franco modigliani. in the 1970s the collapse of the bretton woods monetary order created the conditions for a worldwide inflationary drift. as a result of restrictive monetary policies, there was also a generalized slowdown in economic activity. inflation refocused attention on friedman ’ s ideas. in the united states the federal reserve had long restricted its monetary action to stabilizing interest rates – the policy of william mcchesney martin. in this way the rise in costs and prices was financed almost automatically. with the policy shift instituted by paul volcker in 1979, the fed focused on controlling the quantity of money. for a short time administrative ceilings were also imposed

s understanding of financial services through financial education and literacy. we have made progress in some areas but a lot of work still needs to be done. some of our recent achievements include : • new cbsi act : a new cbsi act was passed by parliament in november last year and one of the new provisions in the law is to specifically include financial inclusion as a mandate of the bank. this now formalises the bank ’ s involvement in financial inclusion activities. • review of legal framework : and to ensure that our other laws also support these efforts, we have, with adb support, completed a review of other laws and policies last year to ensure any legal impediments to financial services innovation are identified and addressed. • simplified kyc requirements : one of the barriers is the stringent bank requirements for opening bank accounts. so in collaboration with the anti money laundering commission, we have issued to the commercial banks simple requirements for identifying customers when opening bank accounts. this will make it easier for more rural people to open accounts with the banks. • financial education : in partnership with the ministry of education, we have set up a working committee to integrate financial education into the national school curriculum, targeting class one up to form three. the revision of the curriculum has bis central bankers ’ speeches been done but further work is required to prepare course materials and train teachers. • adult financial literacy : this is a very important area for us, given the low literacy level in the country especially among rural adults. the central bank is actively engaged in financial literacy through its money smart day programs, its weekly money matters radio program, and also through financial literacy workshops for communities and women groups. these achievements have been possible because of close collaboration and partnership with key stakeholders. working together with other stakeholders is critical if we are to achieve the goals and objectives we have set ourselves in terms of financial inclusion. i am sure this is also true for your respective countries. but i think our biggest weakness is trying to measure what we have done. how are we performing against our set targets? this is where data and indicators become very important. we need relevant data to measure progress and review our performance. and i am delighted to note that the whole of tomorrow is devoted to this very important issue. concluding remarks i would like to conclude by reiterating the importance of continuing to work together to address our common challenges as we strive to enable more of our people benefit from financial services. at the same time i would like to register our appreciation to