Salvatore Rossi: Finance and development

Speech by Mr Salvatore Rossi, Senior Deputy Governor of the Bank of Italy and President of the Institute for the Supervision of Insurance (IVASS), at a conference to mark the 49th edition of Credit Day "Banks, other financial intermediaries and firms: what needs to be done for Italy's development", organized by the Associazione Nazionale per lo Studio dei Problemi del Credito (National Association for the Study of Credit Problems), Rome, 4 October 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

The theme of this year's Credit Day is not new, but the Italian economy's current status makes it relevant and topical once again. What role can finance play in transforming our economy's cyclical growth into real, long-lasting, structural growth? The type of growth that Italy hasn't seen for the last 20 years, though it alone can help us lower unemployment levels, improve the quality of labour, and raise living standards in a stable way? In other words, put Italy at the top of the list of advanced countries, as it was in the past?

By finance we mean all the financing activities on the part of families and firms, undertaken by financial intermediaries such as banks or other non-bank professionals or entities working directly in the financial and capital markets. We will look at it in terms of both supply and demand, and will then assess both the behaviour of those needing financing and the products offered to satisfy those needs, including the manner in which they are offered.

For some time now we have been saying that Italy's financial structure must change if we also want the productive economy to move towards greater growth. We would like firms to make greater use of the markets and to rely less on financial intermediaries, especially banks. Paradoxically, by downsizing their role banks may find a path towards greater profitability, offering higher returns on their growing capital. In essence we would like a virtuous cycle, one that fosters greater growth for the economy and more stability for the banking system.