fabio panetta : micro and macroprudential supervision in the euro area introductory remarks by mr fabio panetta, deputy governor of the bank of italy, at the conference “ micro and macroprudential supervision in the euro area ”, universita cattolica del sacro cuore, milan, 24 november 2015. * * * 1. i am pleased to welcome you all to today ’ s conference on micro - and macroprudential supervision in the euro area. first of all, let me voice my warm thanks to universita cattolica del sacro cuore for hosting the event. the conference focuses on two developments that are reshaping the european financial landscape : the creation of a single micro - prudential supervisor in the euro area, namely the single supervisory mechanism ( ssm ), within the broader context of a prospective banking union ; and the institution of a new macro - prudential framework. banking union represents a strong, vigorous response to the financial crisis. it rests on three pillars : the ssm itself, a single resolution mechanism and the harmonization of existing national deposit guarantee schemes. the idea underlying the design for banking union was to restore confidence in the european banking sector and to preserve and enhance financial integration. the ultimate objectives are safeguarding financial stability and ensuring efficient resource allocation within the euro area so as to support economic growth. in this context, the new macro - prudential framework definitely has a crucial role to play. the crisis has made it clear that a narrow focus on the soundness of individual banks can cause supervisors to overlook emerging threats to the stability of the entire financial system. macroprudential policies are designed to smooth the financial cycle in both expansionary and contractionary phases, working counter - cyclically to prevent the emergence of systemic risks. the toolkit available to banking supervisors is now larger but also more complex. the incentives of micro - and macro - prudential authorities tend to be aligned during economic expansions, but they may well diverge in downturns. when the economy is weak, it is more difficult to strike the right balance between micro - and macro - prudential policies. in my view, this is one of the main challenges that european policymakers face today. these are the reasons why banca d ’ italia, in its capacity as central bank in charge of banking supervision and financial stability, has organized this conference. we have invited two eminent, authoritative speakers to address us on

and 34 with tertiary education ; it is ranked first for the share of young people aged between 15 and 29 who neither study nor work. teacher quality and motivational levels are of vital importance. in many cases, school and university buildings fall short on security ; they should instead be comfortable and equipped with up - to - date technology. moreover, it is necessary to understand that the problems related to education are not only on the supply side : households must also grasp the importance of investing in knowledge, not only in school but also as a lifelong pursuit. ‒ finally, it is necessary to invest in ensuring the high - quality of italy ’ s research. the state spends about €8 billion in its university system, half of what countries similar to italy do, relative to gdp. even just the reallocation of a modest portion of the government budget would lead to a marked improvement in the training of young researchers and in fostering innovation. this would strengthen italy ’ s ability to tap into the european resources allocated to research ; it would also benefit the productive sector, which puts barely 0. 9 per cent of gdp into research, compared with 1. 7 per cent, on average, in oecd countries. the hiring of new researchers, envisaged in the decree issued on 19 may, marks a significant break with the past. the third area to consider concerns the preservation of italy ’ s natural, historic and artistic heritage, which constitutes this country ’ s very identity. the crisis in the tourist sector has made its economic importance immediately apparent. this sector must be preserved and access to it made safe, increasing the use of new technologies so that, after the pandemic, it can once again contribute to growth, even more so than before. • the public resources needed to finance these measures and to promote the productive use of private funds must come from a restructuring of the public budget, the recovery of the tax base, a reduction in the risk premium on government bonds, and the pragmatic and judicious use of european funds. • excluding interest payments, italy ’ s public expenditure is in line with the average for the euro area as a whole, even if the share of pension expenditure is higher and destined to increase further, driven by an ageing population, as in many other countries of the european union. tax revenues are also broadly aligned with the average of the other countries, even if the tax wedge on labour is higher. where italy differs most from the other advanced economies is in the