Bank of Italy, Visco’s final considerations: “There is no time to lose on Pnrr. GDP +1%”

Visco: There’s no time to lose on Pnrr

Visco said that even if “improvements are possible” on the Pnrr, “there is no time to lose”. In his final reflections, he recalls that the plan “represents a rare and generally valid attempt to define a strategic vision for the country.” It is therefore “critical to implement the ambitious reform program contained therein, which has been overdue for too long”. According to Visco, “Continued dialogue with the Commission is absolutely necessary, useful and constructive”.

Visco: “GDP will increase by approximately 1% in 2023”

“For 2023, the forecasts available today correspond to an increase in GDP of about 1%,” said the governor of the Bank of Italy, according to whom “in dealing with the consequences of the war in Ukraine and in overcoming the pandemic, the Italian economy has shown a reassuring responsiveness”. The governor sees in our economy “encouraging signs that need to be strengthened, that need to overcome the delays that still prevent our economy from reaching its full potential”.

Visco: There is no flight of deposits from banks, a physiological decline

According to Visco, there is no flight of deposits from Italian banks, a phenomenon that has shocked US credit institutions after the SVB case, also thanks to digital innovations, but a “physiological decline” in the liquidity accumulated during the pandemic and a shift of depositors to ” more profitable” financial products. The governor of the Bank of Italy adds that “since July last year, when it reached a high of almost 1.620 billion”, deposits have fallen by 6%. “Episodes of turbulence remind us how quickly investor confidence can deteriorate.” Italian banks are “general”, “in good enough condition” “but the uncertainty about the economic outlook calls for caution”. There will be a slowdown in growth as the ECB tightens will increase the number of non-performing loans and “value adjustments, which are currently still low”. He also claimed that conditions in the industry are the result of ten years of recovery, “an outcome that many observers, even authoritative ones, doubted could be achieved”.

Visco: Everyone must contribute against inflation

“Inflation will return faster and cheaper to levels in line with the target if everyone – companies, workers and governments – contributes, reinforcing the effectiveness of the necessary but balanced monetary normalization,” said the governor of Bank of Italy for monetary policy, according to Visco, “must further define its orientation to ensure a gradual, but not slow, return of inflation to target.” It is therefore important “to keep the bar straight on the monetary policy response, but with the gradualness necessary for the uncertainty that has not yet subsided”. According to the Bank of Italy’s number one, “the pandemic hit the country when it had not fully recovered from the damage done by a twin crisis, when the rollout of necessary reforms was slow and fragmented and it found it difficult to tie the knots.” that hinder our development. But Italy has overcome this third very serious crisis, as well as the energy shock following the Russian aggression in Ukraine, better than we expected”. This “now requires us to strengthen our international positioning”.

Visco: 20% young people are still precarious after 5 years

“In many cases, fixed-term employment is associated with very long-term precariousness; the percentage of young people entering fixed-term employment after five years remains close to 20%,” reports Visco, adding “too many, not only young people, do not have regular employment or, despite having one, adequate contract conditions are not recognised”. , less than 60% of the average of 11,600 euros per year. And he adds that “as in the other major countries, the introduction of a minimum wage, defined with the necessary balance, can meet the not negligible needs of social justice.

Visco: “Completing banking union, important role for me”

“Finally, one cannot fail to underline the need to complete the banking union, through a review of the current crisis management discipline and the establishment of a single deposit guarantee scheme,” said Visco, highlighting how “the recent phenomena of instability observed outside the European Union clearly show the importance of achieving these goals”. “Once the reform is fully operational – he adds – the ESM will be able to play an important role in providing a financial backstop to the Single Resolution Fund”. He then recalled that “reducing the size of public debt is a priority of economic policy, irrespective of European rules”. already announced reforms, such as those of the tax administration or differentiated autonomy, cannot ignore the identification of adequate and secure structural coverage”. And he also recalls that “prudent management of public finances is an important signal of credibility; it helps to depress our government bond yields, bringing them closer to those of other major eurozone countries.”

Visco: increase the migration balance in the medium term

Even assuming a gradual increase in the participation rate of young people and women “over the next twenty years, economic growth will not be able to count on an endogenous increase in the labor force”, says Ignazio Visco, suggesting that “the effects of population decline in the central age can be mitigated in the medium term, as well as by an extension of the working age, only by an increase in net migration”.

Visco: listen to young people

“Problems such as the reduction of public debt or the adoption of a lifestyle consistent with the protection of the environment require society to understand and internalize them, not because Europe demands them, but because they protect us from risks and creating opportunities,” says Bank of Italy Governor Ignazio Visco at the end of his last final reflections. Not only can we imagine the future, but we can do it “collectively,” as claimed by Israeli historian and author Yuval Noah Harari, who mentions Visco immediately afterwards. “It is really up to the young, less conditioned by the past, to imagine that world, to identify its opportunities”. years, he is preparing to leave the “special” institution that “I have served in various positions for fifty years.”

Visco’s speech

The recitals were also the culmination of Visco’s 12-year mandate, which saw significant changes to the institution and Italy. From the Berlusconi government, from which he was appointed, to the current Meloni and its majority, with whom, after the first uncertainties, there is a substantial agreement on some important issues, in particular the strictness of public finances. In practice, the Bank of Italy is an independent institution and, since the establishment of the ECB of which it forms part, it has in any case maintained close links with politics and its institutions. Visco has avoided friction and direct attacks in recent years, but has not given up independence and autonomy. But apart from the politics, they were “intensive” years as he himself recently described them, also because they were crossed by a long series of crises such as the resolution of the 4 banks, MPS and non-performing and international credits, such as that of the national debt , Covid and recently the aggression against Ukraine. Crises in which the bank has come under fire on several occasions, because it has been accused of being too or not sufficiently strict with credit institutions.

Who will succeed Visco?

The birth of the ECB’s single supervision has reshaped its tasks and put an end to a number of unwritten practices and traditions. And then there is the say in Frankfurt’s decisions. Visco supported Draghi’s extraordinary policy and with the arrival of inflation he approved the change of pace, but he asked for more gradualism and also to take into account the risks that a sudden correction can create in a country like ours , which is growing, but comes with a risk. high debt and an economy that is dependent on the bank credit channel, which means that a tightening can actually do damage. For now, neither he nor the other Italian member of the board of directors, Fabio Panetta, whom many refer to as his successor, have been heard. A hypothesis that is not taken for granted, since the internal solution, with the exception of Draghi’s bracket, is the one followed in the Bank. The first word, by law, belongs to the government and the prime minister, but the nomination is then made by the president of the republic, a non-formal step.