mario draghi : the transatlantic relationship in an era of growing economic multipolarity keynote speech by mr mario draghi, governor of the bank of italy and chairman of the financial stability board, at the peterson institute for international economics – bruegel conference, washington dc, 8 october 2010. * * * let me start by thanking [ fred, the iie, bruegel ] for inviting me to this policy debate on regulatory reform and transatlantic relations. the issues on the conference agenda are highly topical and present challenges for international policy makers. just as is the case for tackling the problem of global climate change – another important topic on your agenda – achieving a more stable and resilient global financial system requires coordinated action at the global level. the us and europe have strong joint interests in this and are critical to progress. but so are the growing weight of countries beyond these continents, and they have come to play an increasingly important role in shaping global outcomes. in my remarks i will first review what we have achieved so far in terms of financial reforms. i will then turn to important challenges still ahead of us. and i will conclude with thoughts on international policy coordination and the role of the fsb. achievements so far we have come a long way towards strengthening the financial system since this crisis began, reflecting an unprecedented amount of international co - ordination in achieving consistent reforms. while issues remain to be resolved, in europe, in the us and elsewhere, we are, collectively, fundamentally reshaping the framework for systemic financial oversight. let me note some examples : – first, top - down, system - wide oversight arrangements are being put in place at national, regional and international levels. these arrangements are designed to deliver more encompassing surveillance, with broadened macro - prudential perspectives, and better mechanisms for triggering action on identified risks. examples are the european systemic risk board and related arrangements, the us financial services oversight council, the imf - fsb early warning exercise, and the establishment of the fsb itself. – second, major jurisdictions have overhaulied their regulatory and supervisory structures to strengthen responsiveness to risks, improve coordination and close gaps. the fsb is in many ways the international manifestation of these efforts ; – third, the regulatory perimeter is being expanded. major jurisdictions have finalized or will shortly finalize legislation that establish regulation and oversight over the otc derivatives markets, hedge funds and credit rating agencies. in each of these areas, principles for what regulation should achieve have been internationally agreed

accordance with the legislative decree under discussion. the bank ’ s board of directors has already approved the proposed amendments, which will be put to the extraordinary general meeting of shareholders to be held on 19 march : they will be rendered compatible with the final text of the legislative decree. the amendments to the bank ’ s statutes will then follow the procedure laid down for their approval by the president of the republic. * * * in italy the monetary policy approach that has been followed in the last few years, and will be maintained in the coming years, is aimed at convincing market participants, workers and businessmen that increases in income can only be achieved by expanding economic activity. the action taken on the monetary front, of necessity extremely rigorous at times, has made a major contribution to the convergence of italy ’ s economy towards those of european countries with a more firmly established tradition of stability. the decisions that will be taken by the european central bank will have maintaining price stability as their objective. labour market, incomes and fiscal policies will increasingly be the only ones available to promote the competitiveness and profitability of italy ’ s enterprises, and growth in production and employment. they will have to give renewed impetus to productive investment. the ample availability of savings, of which a large part is invested abroad at present, makes this possible. the revival of economic activity in europe as a whole cannot be based on manoeuvres to enhance competitiveness through the exchange rate of the common currency ; such action would be in conflict with the primary objective of monetary stability. this will have to be underpinned by a strong productive system, to be achieved by curbing budgets and taxes, boosting investment and making more flexible use of the factors of production. these are the indispensable conditions for achieving faster growth and creating new employment.