universita cattolica del sacro cuore a future for europe. conference in memory of giacomo vaciago monetary policy in the euro area : past, present and near future speech by the deputy governor of the bank of italy fabio panetta milan, 6 april 2018 1. introduction 1 the figure of giacomo vaciago is part of our country ’ s recent history. following his studies at the catholic university of milan and at oxford, giacomo was a professor of economics at ancona and then professor of political economy and monetary economics at the catholic university of milan. in 2016 the catholic university awarded him the title of emeritus professor, closing the circle that began with his graduation in 1964. the strength of giacomo ’ s commitment to society and its institutions is well - known : columnist for the newspaper il sole 24 ore from 1983 ; advisor to the minister for the treasury ( 1987 - 1989 ) and to the prime minister ( 1992 - 1993 ) ; mayor of piacenza ( 1994 - 1998 ) ; advisor to the ministry of art and culture ( 2003 - 2005 ) and to the minister of labour and social policies ( 2014 - 2016 ). giacomo was a committed european. his last book, un ’ anima per l ’ europa ( a soul for europe ), posed some key questions about the future of the union. 2 four years ago he urged europeans to ‘ pool their virtues rather than their vices ’ – something they had often done in the past – and his words still hold true today. but first and foremost, giacomo was a friend i had the good fortune to work with on several occasions. our conversations were an opportunity to look more closely at problems and analyse them rigorously, but also a way to defuse situations, tongue - in - cheek. the page commemorating giacomo on the catholic university ’ s website opens by noting that ‘ students who attended giacomo vaciago ’ s lessons on monetary economics and political economy were very fortunate, because they learned things that are not in the textbooks ’. indeed, the monetary policy of recent years can certainly not be found in a textbook : it is no coincidence that giacomo observed it carefully and was a strong supporter. 3 in a speech i gave in april 2016 my starting point was the observation that in the decade following the collapse of lehman brothers central banks have been more creative and i would like to thank piergiorgio alessandri, marco casiraghi, pietro rizza, stefano siviero, emilio vadala and

is growing. in particular, young customers ( e. g. the millennials and generations y and z ) require progressively more customized and integrated services usable through apps and ‘ super - apps ’. digitalization can increase the financial inclusion of previously underserved groups of consumers, easing their access to financial services. public institutions and authorities are leveraging digital innovations to fulfil their mandates, including combating money laundering and terrorism financing and preserving financial and monetary stability. alongside important opportunities, digitalization poses considerable challenges for traditional intermediaries and for regulatory and supervisory authorities. the former need to keep up with the increased competition, as mentioned before, and with new kinds of risks, as well as the evolution of the traditional ones, such as cyber and operational risks, associated with the digitalization of financial services. i am also thinking about governance, profitability, capital adequacy, compliance and financial stability in a broader perspective. moreover, many of these risks are cross ‑ sectoral in nature, and they therefore require coordination and cooperation with other international fora and standard - setting bodies. one example is how digitalization makes financial and payment services more efficient, but increases their vulnerability to operational risk and in particular to cyber ‑ attacks on the critical infrastructures powering payment systems and financial markets, including up ‑ and ‑ coming dlt - based infrastructures. the vulnerability of financial and payment systems to hacking and theft increases financial crimes, such as money laundering and other illegal activities, at cross - border level as well. the authorities need to reconcile the promotion of innovation with the need to safeguard consumers and investors, avoid the exclusion of or discrimination against less digitalized users, ensure the proper functioning of market infrastructures and payment systems, and preserve the safety and stability of the financial system and the economy as a whole. over the next few years, these challenges may call for a profound reshaping of our supervisory methodologies and toolkit and for substantial investments in new skills. it is extremely important that supervisors develop proper competencies to understand the risks ( it, operational, reputational, but also in terms of strategic / business model risk ) that may arise for the supervised entities. 2. intermediaries looking for a balance between resilience and adaptability : in this challenging environment, reaching a balance between adaptability and resilience is becoming an extremely important task for the financial system as a whole. in preparing this speech and reflecting on the terms ‘ resilience ’ and ‘ adapt