ignazio visco : the sovereign debt crisis and the outlook for italy address by dr ignazio visco, governor of the bank of italy, to the 18th congress of financial markets operators organised by assiom forex ( the financial markets association of italy ), parma, 18 february 2012. * * * last november the spread between the yield on ten - year btps and their german equivalent reached 550 basis points ; yesterday at the close it stood at 365 points ; in the first six months of 2011, it had been mostly below 200 basis points. tensions remain high in the international financial markets. the difficulty in resolving the greek crisis, evident again in recent days, is transmitting turbulence to the entire european market. investor uncertainty over italian government securities has eased with respect to the worst moments of the crisis, but has not disappeared. the markets ’ attention is now focused on italy ’ s ability to make further determined progress in the restoration of its public finances and simultaneously stimulate its economic growth potential through structural reforms. the path has been set with clarity of purpose ; international public opinion acknowledges as much ; it must now be followed with perseverance and resolution. but no - one can succeed on their own. to lower the risk premiums on the government securities of the countries engaged in financial stabilization and the revival of output, decisions must be taken by common accord. the determination of all to reinforce the european construction is essential. in recent months italy ’ s economic policy has taken steps towards financial sustainability which were once deemed inconceivable, for example regarding the pension system. equally bold steps are expected on other, decisive fronts, to which the government is already committed : the efficiency of the taxation system and the fight against tax evasion ; the public sector spending review, which will analyze every item to identify possible redundancies and savings ; and the simplification of laws, institutions and practices that are blocking the country ’ s energies, reducing firms ’ competitiveness and frustrating the expectations of the younger generations. 1. the sovereign debt crisis and the outlook for italy for two years now the global financial crisis has found a new and dangerous focus in the euro area. the turbulence was initially confined to greece, whose budget situation had long been obscured by the official statistics ; it then spread to ireland, which suffered the consequences of the profound crisis in its banking sector, and to portugal, penalized by its foreign trade deficit. the limits of euro - area governance have become apparent. multilateral monitoring of national

simple but powerful idea – that the well - off cannot go on doing obscenely well even as the rest keeps moving backwards. the message from this collective rage is that growth itself can be destabilizing if it is not inclusive. bis central bankers ’ speeches on that sobering thought, ladies and gentlemen, please join me in welcoming mr. tharman shanmugaratnam to deliver the 13th l. k. jha memorial lecture on the challenge of inclusive growth. bis central bankers ’ speeches