data concerns transition plans. the issue is gaining attention within the financial community due to a growing awareness that successful environmental risk management ( as well as the making or breaking of the ecological transition ) crucially depends on the strategic choices of companies, rather than on their current carbon footprint. in this context, an approach that places excessive reliance on the financial system should be avoided. merely pushing banks to adopt decarbonisation objectives for their assets in the hope that this will be sufficient to drive the economy towards the paris goals appears to be a risky approach. a more robust strategy should be multi - pronged : it should broaden the pressure to the entire financial sector but also, and more importantly, to the non - financial companies, at least the largest ones and those with high emissions. these firms should adopt realistic and ambitious decarbonisation plans, and intermediaries should challenge and finance these plans. this approach would also enable a better focus on the technological constraints conditioning the transition, which must be taken into account. europe has indeed adopted such multi - pronged approach : the csddd is expected to introduce mandatory transition plans for all companies, financial and non - financial, bringing about a virtuous convergence of the entire economic system towards the principles of the taxonomy and the paris goals. it remains to be seen whether this virtuous convergence will actually take place. the current energy crisis is resulting in huge profits for the fossil fuels industry, and government subsidies for energy consumption. this reminds us that today ’ s technology does not allow an accelerated transition to low - carbon sources ; that the investments required are enormous ; that the demand for energy cannot be easily reduced without radical changes in consumption habits and lifestyles which the populations do not seem willing to accept, especially in advanced countries. in this context, it will also be necessary to address the issue of the potential conflict between the traditional objective of investment – maximising risk - adjusted returns – and the transition plans of investors and banks. so far, esg investment has been rewarded with similar returns as traditional investment. however, it does not seem possible to rule out that, in the future, transition plans might collide with the maximum return objective. in this case, what goals should be sacrificed? if not openly recognised and managed, this conflict may stoke greenwashing and represent a serious obstacle to the contribution of the financial system to policies to combat climate change. the bank of italy has started a dialogue with italian financial intermediaries aimed at understanding their

conceived with international banks in mind. while this ensures fair competition within the single market and creates a robust framework that safeguards stability, it imposes high compliance costs on smaller banks ( despite the simplified rules they benefit from, even on very important parts of the regulations, such as market risk, employee compensation and reporting obligations ). complex risks cannot but require detailed rules. however, an excessively complex regulatory system can itself become a source of risk : it can generate uncertainty as to the application of the rules, can serve as an incentive to conduct business outside the scope of application of the rules, and may result in a disproportionate burden on smaller or more specialized banks. the opportunities and risks presented by technological innovation in the financial arena the challenges posed by technology are inescapable, for banks, for businesses, for each and every one of us. closing the gap that has accumulated over the last thirty years in economic and financial innovation and in the skills of adults and students requires a collective effort. banks are expanding the range of traditional services available online but have not yet begun to invest significantly in the latest technologies. in industry, the recovery of competitiveness in the international markets witnessed in recent years must be supported by policies that encourage firms to innovate and expand. however, further progress can only be made if we all recognize the importance of investing in culture and knowledge to provide an education that encompasses not just the student years but people ’ s entire working lives. digital technologies make it possible to increase financial inclusion, leading to more efficient resource allocation and supporting investment and economic growth. new ways of collecting large volumes of heterogeneous data and new methods for analysing them ( including artificial intelligence and machine learning applications ) make it possible to assess customer credit ratings more accurately and the terms and conditions at which loans will be granted. the benefits of using new technologies are greater in the payment segment and in that of loans to firms that operate in sectors and areas in which lending is riskier. the advantages of exploiting digital technologies tend to be greater for smaller banks, whose customers are mainly small firms. nowadays, a number of crowdfunding platforms put firms in direct contact with both retail and institutional investors, increasing access to funds. the use of distributed ledgers for trading shares of unlisted smes, which are currently being tested, reduces the costs of accessing capital markets. these technologies, which are experiencing rapid growth abroad, can also make inroads in italy,