of contractual obligations to policyholders. in short, the risks, both real and financial, would have been far greater had we not taken the nonconventional measures in 2014 and early this year. the greatest threat to the euro area ’ s financial stability comes from the prospect of a combination of excessively low inflation and stagnating activity that the ecb programme aims to overcome. indeed, there is, and not limited to the euro area as clearly observed in the outlook, a substantial disconnect – the “ greatest puzzle ” of today ’ s global macro - financial setting – between a reluctance to take economic risk, resulting in the still subdued recovery of business investment, first and foremost in advanced countries, and a high propensity to take financial risk, as epitomized by high asset price valuations and compressed spreads. a better balance between financial and economic risk taking is the key to faster growth but it is itself fraught with risk. it rests mostly on complementary policies, including monetary and macroprudential ones, and especially on structural reforms that respond to the many challenges coming from a globalized environment and substantial changes in technology. the outlook helps to shed light on a question we are all asking : how is it that today ’ s very favourable financing conditions have been little able thus far to foster a substantial recovery of business investment ( which we all know is a precondition for growth and job creation ). bis central bankers ’ speeches uncertainty has long been identified as the main culprit, but the report adds value by highlighting the role played by such factors as strategies of multinational enterprises, participation in global value chains, and incentives to short - termism not only for companies but also for institutional investors. here is where i find one of the report ’ s distinguishing features, a methodological one, namely that the analysis of the recent evolution of business investment is conducted using data on a large number of the world ’ s biggest corporations, thus complementing other analyses of a more macroeconomic nature. also interesting is the contrast noted between the still subdued recovery of business investment in advanced economies and the signs of over - investment in the general industrial sector of many emes ( not only china ). by taking the current levels of low interest rates as a starting point, the report links this shortto medium - term feature with important longer - term themes such as population ageing and the sustainability of ( public and private ) pension and healthcare systems. new and old financial risks are appropriately

mario draghi : the turner review rollout remarks by mr mario draghi, governor of the bank of italy and chairman of the financial stability board ( previously financial stability forum ( fsf ) ), at the turner review conference, financial services authority ( fsa ), london, 27 march 2009. * * * the past eighteen months of crisis have been a learning experience for all of us. many had expressed forebodings about the build - up of risks and leverage ahead of the crisis – and i would count both the fsf, bis and the fsa in that number – but the weaknesses of risk management at major banks were so serious and pervasive as to defy even the more pessimists. authorities have had to re - examine their fundamental assumptions about how the financial system works, and draw conclusions for how to reshape regulation. lord turner ’ s review does an excellent job at both of these tasks. as we seek solutions to these immediate challenges, from a longer - term perspective we are revising our ideas about what regulation can do, what it cannot do, and what it needs to do. some say that we should avoid detailing how we will move to a more transparent, better capitalised, less leveraged system in the future and that to do so now would increase the burdens and uncertainties faced by banks in the present. i, and i think lord turner as well, would reject this view. to the contrary, as policymakers, while being fully aware about the time scale of implementation of these measures, we need to be as clear as possible right now about how we see the system evolving as we emerge from this crisis, if we are to rebuild confidence in the system among financial institutions, investors and the public at large. lord turner ’ s review lays out a sound, well argued case for revising our approach to financial regulation and placing such revision in an international context. many of these changes are fully in line with discussions and recommendations that have taken place in the fsf. this shouldn ’ t come as a surprise, since lord turner and callum mccarthy before him, and more broadly the whole of the fsa have made important contributions to these recommendations. i would especially emphasise : • improving the quantity and quality of bank capital, especially for the trading book ; • improved regulation and risk management of liquidity risk ; • a risk - based approach to compensation in the financial industry ; • counter - cyclical capital buffers ; and •