sectors. this problem is layered on top of the ‘ structural ’ ones tied to there being fewer opportunities to exploit economies of scale and to diversify, and to the restrictions on accessing capital markets. given these considerations, which we too have recalled repeatedly, the development of a harmonized banking crisis management framework at european level is necessary and urgent, in order to foster the orderly exit of these intermediaries from the market. it remains crucial that banks be headed by individuals whose professionalism and integrity are beyond reproach. the recent measures issued by the government finally implement the relevant european legislation ; they strengthen, in line with international standards, the requirements and eligibility criteria for bank officials ; and they constitute an important step forward in defending the stability of the system and the interests of investors, be they small shareholders or bondholders of credit institutions. the action taken by the supervisory authorities to ensure sound and prudent management must of necessity be complemented by the conduct and competence of bank executives : it is they, first and foremost, who must guarantee the proper functioning of internal controls, an adequate monitoring of risks, and a medium and long - term strategic vision apt for facing the challenges posed by the difficult economic phase. the new legislation represents an opportunity, starting with the upcoming shareholders ’ meetings convened to make new appointments, to renew and enhance banks ’ managerial human capital, not just for the largest banks. the markets and the g20 finance track the banking sector is helping to sustain the economy in this phase of the public health emergency ; it will need to continue providing its support during the recovery as well, with a complementary role to that of public sector and monetary policy interventions. however, the banks ’ role will not only be to lend to firms, but also to help them access alternative funding sources, especially for risk capital. action is needed to increase trust in the possibility of using savings profitably, so that they can be invested in instruments that allow the firms with the best prospects to be funded. the underdevelopment of italy ’ s equity market compared with those of the other main economies stems from the small average size of firms and from their historically low propensity to seek a listing. in recent years, however, there has been an increase in firms ’ initial public offerings, especially for small and mediumsized companies and those that are more high - tech. the dynamism of firms, the incentives introduced by the legislator and the simplified listing procedures adopted by the market are all contributory

monetary policy and the return of inflation * ignazio visco governor of the bank of italy the warwick economics summit 2023 bishnodat persaud lecture coventry, united kingdom, 11 february 2023 introduction and some history inflation is back. after at least three decades of moderate - to - very moderate consumer price changes in advanced economies, inflation has returned to levels that are severely affecting the lives of households and firms, their decisions to consume and to save, to work and to invest. last year, average inflation for the world economy was almost 9 per cent, more than 7 per cent in advanced countries and almost 10 per cent in emerging and developing economies. during the year it peaked at between 9 and 11 per cent in the united states, the euro area and the united kingdom, well above the targets of central banks ( fig. 1 ). in this lecture, i will mainly consider the recent developments of inflation in the euro area and the monetary policy response that has been taking place since the autumn of 2021. the high inflation that we are observing is by no means a new phenomenon, although perhaps one that had been increasingly considered a phenomenon of the past. indeed, even higher inflation peaks were recorded in many advanced economies in the 1970s and the early 1980s. a close look at the dynamics of inflation since 1970 suggests a possible periodisation for the last 50 years. the years of high inflation. the 1970s and 1980s were characterised by two oil shocks, which pushed consumer price inflation above 20 per cent in countries like the united kingdom and italy, and to 15 per cent in the united states. to make things worse, following the spikes due to higher oil prices ( initially linked to the yom kippur war in 1973 and subsequently as a result of the iranian revolution in 1979 ), and notwithstanding some key differences in its manifestation across countries, inflation turned out to be very persistent. in italy and the united kingdom, for example, high inflation lasted until the counter - shock of 1986 ; 1 in the united states, consumer price growth remained above * i wish to thank the organisers of the warwick economics summit 2023 for their invitation and for setting up an impressive programme and avinash persaud who kindly asked me to deliver the bishnodat persaud lecture. i am also grateful to pietro rizza, massimo sbracia and alessandro secchi for their contributions and suggestions. in 1986, when saudi arabia decided to increase production to raise its market share, oil prices collapsed returning