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Supervisory authorities must facilitate and accompany the financial system’s adaptation to the new economic and regulatory environment and to technological advances and climate change. In Europe, it is must to complete the banking union, above all by providing adequate instruments for an orderly management of crises applicable to all intermediaries; a road map must be laid down for the introduction of a genuinely common deposit insurance scheme.
Initiatives that could have procyclical effects or jeopardize financial stability must be avoided. To complete the Economic and Monetary Union and make the Eurosystem’s action more effective, greater integration in the capital markets and a pan-European fiscal policy are also needed. A decisive role in achieving these objectives could be played by the introduction of a common risk-free debt security, as is the case in the other major advanced economies.
In Italy, intermediaries must be resolute in upgrading their governance structure, their technological assets, and their business models. They must pursue levels of efficiency and profitability that can guarantee their ability to attract capital from the market and support economic activity.
However, neither intermediaries nor central banks alone can create growth. In order to achieve a higher path of stable expansion, economic policies are needed that look beyond the one-year horizon of the government budget.
Setting out a systematic reform framework encompassing all the individual measures can in itself provide an expansionary boost by reducing the trust deficit, which weighs on government bond yields and private enterprise even more than the public finance deficit does. A return to enduring growth must be pursued in full respect of environmental, financial and social considerations.