real long - term rates stood at about 5 % in the first half of the 1980s. today, excluding japan, they still stand at around 4 %, above the rate of economic growth. the high level of real interest rates is a reflection of the high returns that can be earned on investments in the emerging countries and the growing risks of a financial nature, which, even though they originate in national markets, affect the whole system. to an even greater extent, with the money supply constant or even slightly declining in relation to gdp as a consequence of rigorous monetary policies, real interest rates are influenced by the rapid growth in the volume of private and, above all, public sector securities. the ratio of the quantity of money to nominal output has held steady or fallen a little in the leading countries in the 1990s ; in 1996 it stood at about 64 %. after rising sharply in the 1980s, international liquidity as measured by cross - border deposits has remained virtually unchanged. for the private sector to acquire the growing stock of financial assets, real interest rates have to be high ; the growth in public debt, due first and foremost to the imbalances in social security systems, is a source of pressure on real resources. the gap between interest rates and economic growth rates is a cause of rising unemployment. 3. italy ’ s role in international finance in the course of the 1990s, with the complete liberalisation of capital movements, italy has become a full participant in the international financial markets. gross capital inflows and outflows have increased enormously. this process has sustained the accumulation of financial assets and encouraged residents to diversify their portfolios by type of instrument, country of issue and currency of denomination. between 1990 and 1996 net portfolio investment abroad by the private sector amounted to 190 trillion lire, accounting for 9 % of the growth in total financial assets. the share of foreign instruments in the total financial assets of the private sector rose from 6 % at the end of 1989 to 14 % at the end of 1996. the growing flow of savings invested abroad also reflects a domestic supply of financial instruments that is still not sufficiently diversified in terms of risks and returns. italy ’ s participation in the global market of finance has encouraged foreign capital inflows, mainly directed towards the government securities market. at the end of last year non - residents held 370 trillion lire of italian government securities or 20 % of the total amount outstanding, compared with 4 % at the end of the 1980s. when doubts have emerged about

focus its efforts and resources on the long - term challenges of poverty eradication and sharing prosperity in the poorest countries. with these goals in mind, we expect that a larger group of countries will consider mobilizing resources. we welcome progress in leveraging ida equity, which will enable the bank to both target scarce concessional financing to the poorest ida clients and increase allocations of non - concessional resources to countries at a more advanced stage of development, in line with the different needs and capacities of ida ’ s evolving client base. we support the proposal of a window in ida18 to leverage ifc and miga to promote private sector development in ida - only countries, paying special attention to fragile conflict situations. we nonetheless think that the best way to promote private sector activity in these areas is to address the challenges related to institutional capacity and regulatory framework. 4. the forward look we welcome the report on the year - long engagement between the board of directors and senior management on the medium - to long - term role of the world bank group. it provides an important basis for the decisions shareholders should make on the financial capacity. given the ambitious agenda of the 2030 sustainable development goals ( sdgs ), the wbg should help address the issue of why the large amount of global liquidity flows only to a limited extent towards capital - poor countries. while this may still be due to global capital market imperfections, differences in fundamentals that affect the structure of these countries ’ economies — such as technological capabilities, missing factors of production, government policies, and institutional structure — play an important role. therefore, the crucial role of the bank is to build on the knowledge accumulated in so many years of financing for development and help developing economies overcome such shortcomings. in particular, helping countries implement the policies most conducive to a friendly business environment is essential to leverage private sector investments. we recognize that an appropriate funding of the measures to achieve the sdgs in a challenging global economic context may put pressure on the wbg ’ s financial resources. as the world bank ’ s scope of intervention cannot be unlimited, particularly in an international environment where many organizations share the same broad goal of helping the poor, scarce resources should be used with greater efficiency. we need a more intense coordination among all multilateral actors, building on their respective missions and expertise. we strongly recommend an optimized use of resources and enhanced selectivity of interventions, firmly grounded in the bank ’ s comparative advantages, with a