Remarks by Mr Luigi Federico Signorini, Deputy Governor of the Bank of Italy, at the panel on "Central banks, financial integrationand capital flows", Conference "Financial integration and inclusive development: A view from the Mediterranean Countries", jointly organized by the Bank of Spain and the European Institute of the Mediterranean (IEMed) with the support of the Organization for Economic Cooperation and Development (OECD), Madrid, 13 December 2019.
It is a great pleasure to be here. The topic of this session is among the most challenging for central banks today.
My contribution will be in four parts. I shall start with some observations on monetary policy and financial spillovers in a financially interconnected world, before moving on to consider the role of the euro area, followed by the implications for the Southern Mediterranean countries. I shall conclude by discussing policy implications.
The debate on monetary and financial spillovers in a financially interconnected world
Global financial integration has been increasing rapidly over the last twenty years. Cross-border asset and liability positions have doubled as a share of global GDP since the Asian financial crisis of 1997-98.