riccardo faini memorial conference italy ’ s lost productivity and how to get it back bank of italy, via nazionale 91 opening remarks by ignazio visco governor of the bank of italy rome, 13 january 2017 i am pleased to welcome all participants to this conference to remember professor riccardo faini. i first met riccardo in 1978 when i presented a paper written with stefano micossi in the famous monetary workshop held by franco modigliani and stan fisher at mit ( riccardo was then a phd student with giampaolo galli and luca barbone … ). we met often in the following years inside and outside of italy, socially and professionally, exchanging views and commenting on each other writings. indeed, issues related to the topic of today ’ s conference – long - standing poor productivity dynamics in italy – happened to be at the centre of a couple of professional exchanges between us in the mid - 1990s and early 2000s, which i would like to briefly share with you. in 1994, at a seminar on “ the new frontiers of economic policy ” ( le nuove frontiere della politica economica ) organised by the innocenzo gasparini institute for economic research ( igier ), i discussed – along with luigi spaventa – a paper by riccardo on wage and productivity differentials ( stesso lavoro, diverso salario?, i. e. “ same jobs, different wages? ” ) between northern italy and southern italy – the mezzogiorno. the starting point of riccardo ’ s analysis was that a convergence in nominal wages between the two regions since the late - 1960s had not been accompanied by a parallel convergence of productivity levels ; the ensuing higher unit labour costs in southern italy were thus contributing to higher unemployment there. in order to achieve more wage flexibility in southern italy ’ s labour market, riccardo ’ s main proposal was to introduce a third type of wage bargaining arrangement – a regional one – to complement or replace bargaining at the centralised and firm levels, with a view to bringing closer wages and productivity levels while addressing higher unemployment in the south. in my comments i raised some criticisms, but on one major point we were in close agreement, namely that the issue of lower productivity ( and higher unit labour costs ) in southern italy should be addressed not only by reforming the labour market but also by implementing broader structural reforms to overcome well - known distortions of the general institutional

addition, in line with the best practices issued by the international standard setters, the deposit guarantee schemes directive ( dgsd ) recognized dgss as fully - fledged participants of the safety net. under the dgsd, member states may allow dgss to perform more than a reimbursement function and use the available financial means to prevent the failure of a credit institution ( preventive interventions ) and to finance measures in the context of national insolvency proceedings ( alternative interventions ), subject to certain conditions and limitations ( notably the least cost criterion ). 4 the use of measures other than payout has significant advantages. not only are they less costly than payout, but from a system - wide perspective they also help to safeguard depositors ’ confidence and overall financial stability, mitigating the disruptive effects of piecemeal liquidation. 5 italy ’ s longstanding experience confirms the central role of dgss in crisis management. since the establishment of the two italian dgss, 90 interventions out of 93 have been preventive or alternative and only 3 have been payouts. 6 alternative measures proved to be paramount to solve banking crises and a real strategic partnership can be identified among banca d ’ italia and the two italian dgss. see article 11 ( 3 ) and 11 ( 6 ) of the dgsd. piecemeal liquidation is therefore the worst crisis management option, with negative impacts on public confidence and on overall financial stability, while interventions other than payout ensure the continuity of the bank ’ s borrowing relationships and the preservation of the enterprise value and of the employment level, and a high degree of depositor protection. see ‘ the banking crises of 2023 : some initial reflection ’, speech by paolo angelini, deputy governor of banca d ’ italia, at the event ‘ promoting accountability in times of crisis ’, november 2023 ; a. de aldisio, g. aloia et al., ‘ towards a framework for orderly liquidation of banks in the eu ’, notes on financial stability, 15, august 2019 ; and ‘ protecting depositors and saving money ’, occasional paper series, ecb, frankfurt am main, june 2023. more specifically, the interbank deposit protection fund ( fitd ) has managed 16 interventions since 1987, of which 9 were alternative interventions, 2 were depositor payouts and the remaining 5 were preventive interventions. the deposit guarantee scheme for cooperative banks ( fgdcc ) has carried out