1

Thisnewsletterisatwice-yearlypublicationintendedtoinformreadersregu-

larlyaboutinternationaltechnicalcooperationattheBankofItaly,especially

seminarsandworkshops.

TheBankof Italy is engaged in technical cooperationactivities (i.e. semi-

nars and workshops, bilateral staff training and institution building) to

strengthen the institutional capabilities of the bene iciaries. The bene iciary

institutionsaregenerallyinnewEUmemberstatesthathavenotyetadopted

the euro, EU candidate and potential candidate countries, Mediterranean

countries, Eastern European and Caucasian countries within the European

NeighbourhoodPolicyarea,BRICSandotheremergingcountries.

The areas of cooperation relate to the Bank’s institutional functions

(central banking including market operations, payment systems and

treasuryservices,economicresearchandstatistics,bankingand inancialsu-

pervision,andcurrencycirculation)andsomesupportactivities(IT, internal

auditing,controls).

Furtherdetailsonhttps://www.bancaditalia.it/compiti/ricerca-economica/

cooperazione-tecnica-internazionale/index.html

2017 (2nd Semester) Highlights 1

Seminars&Workshops 2

2017 Activities − Snippets of Information 3

2018 Seminar & Workshop Catalogue 6

General Information 9

Contacts 9

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Highlights

NUMBER 9

JANUARY 2018

2017 (2nd Semester)

Duringthesecondhalfof2017thenumberofrequestsfortechnicalcoopera-

tion addressed to the Bank of Italy almost doubled.Most of the activities

wereperformedfortheNationalBankofUkraine,followedbythecentralbanks

ofAlbaniaandTurkey.TheactivitiesheldinRomeinvolvedatotalof191partici-

pantsfromallovertheworld.

Anoverviewofalltheactivitiesheldin2017,includingsomecomparisonswith

thoseheldinpreviousyears,isavailableinside.

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Seminar on ‘Balance of Payments Data Pro-

duction According to BPM6: the Experience

of the Bank of Italy’

(Rome, 12-14 July 2017)

Participants:28

TheBalanceofPayments(BoP)andtheInter-

national Investment Position (IIP) are core

macroeconomicstatistics.Theyarecrucialfor

understandinghowaneconomyinteractswith

therestoftheworld,inparticularitscompeti-

tiveness and degree of inancial inter-

dependency.Theyarealsoofgreatinterestfor

analyzing large cross-border inancial lows.

Monetary policy and economic analysis and

forecasting,aswellasworkon inancialstabil-

ity and banking supervision, all rely on this

data. The recent inancial crisis was a stark

reminderoftheimportanceofBoP/IIPstatis-

ticsandthiswasalsore lectedintheinclusion

of key BoP/IIP indicators in the Macroeco-

nomicImbalanceProcedure(MIP)scoreboard,

an early warning system established by the

EuropeanUnionin2011.

[Readmoreonpage10]

Workshop on ‘Financial Reporting and Op-

erating and Accounting Systems: the Case

of the Bank of Italy’

(Rome, 28-29 September 2017)

Participants:20

The use of unconventional monetary policy

instruments in response to the crisis, suchas

assetpurchaseprogrammes,longer-termre i-

nancing operations, and negative interest

ratesdramaticallyaffectedthebalancesheets

andpro it and loss accounts of central banks

as well as their accounting functions. New

monetarypolicyoperationsmadeitnecessary

to develop new rules, to adapt the reporting

schemes, to re ine the architecture of the ac-

counting system, and to strengthen internal

controls in order to manage increasing risks

effectively. At the same time, central banks

facedincreasingdemandforaccountabilityon

how inancial resources are used to pursue

theirinstitutionaltasks.

[Readmoreonpage10]

Workshop on ‘Macroprudential Analyses

and Supervision’

(Rome, 19-20 October 2017)

Participants:24

Nowintoitssecondedition,theworkshopad-

dressedsomekeytopicsforcentralbanksand

supervisory authorities. Macroprudential

analyses and policies are currently acknowl-

edgedasessentialtopreserve inancialstabil-

ity and contain systemic risks. Central bank-

ers, regulators and supervisors are still gain-

ingexperienceindevisingmethodologiesand

toolsaswellasinde iningthemostappropri-

ateframeworksforpoliciesandinterventions.

[Readmoreonpage12]

Seminar on ‘Monetary Policy Implementa-

tion and Liquidity Management’

(Rome, 22-24 November 2017)

Participants:22

Since the outbreak of the global inancial cri-

sis, central bankshave introduced awide ar-

ray ofmonetarypolicymeasures in response

tounprecedentedchallengesstemmingfroma

generalcollapseofcon idence,atighteningof

inancial conditions and a severe economic

downturn. Central banks’ responses included

massiveliquidityprovisiontoabroaderrange

of counterparties against a larger setof eligi-

ble collateral, private asset purchases (i.e.

credit easing), public asset purchases (i.e.

quantitative easing), negative interest rates,

andforwardguidance.

[Readmoreonpage13]

Workshop on ‘Customer Protection in the

Banking Sector – The role of the Bank of

Italy’

(Rome, 4-5 December 2017)

Participants:22

In the aftermath of theglobal inancial crisis,

inancialconsumerprotectionhasemergedas

acriticalissue,whichshallbeaccomplishedby

several means: a proper regulatory frame-

work,asoundsupervisorysystem, the imple-

mentation of alternative dispute resolution

systems,acomprehensivestrategyforadvanc-

ingthe inancialliteracyofconsumers.

[Readmoreonpage14]

Seminars & Workshops

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2017 Activities − Snippets of Information ...

0%

5%

10%

15%

20%

25%

G20 EU - Candidate

and Potential

Candidate

Countries (not

incl. Turkey)

CIS (not incl.

Russia)

MENA (not incl.

Saudi Arabia)

Non-eurozone

countries

Asia (not incl.

India)

Sub-Saharan

Africa (not incl.

South Africa)

Latin America

(not incl.

Mexico)

others

BoI International Technical Cooperation Activities

Distribution by participants' geographical area of origin

2015 - 2016 - 2017

2015 2016 2017

Inthelastyear,participantscame

mostlyfromG20,EU-candidate

andpotentialcandidatecountries

andfromtheCIS.Whilepartici-

pantsfromthelasttwogroups

increased,especiallythosefrom

theCIS,theonescomingfromthe

G20countriesshowedaslight

decrease.

ParticipantsfromAsiancountries

(especiallyfromChinaandVi-

etnam)sawthemostsigni icant

increaseinpercentageterms.

47%ofactivitiesconsistedofincomingstudyvisitsandvideoconferences.

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… 2017 Activities − Snippets of Information ...

76%ofactivitiesconcernedtopicsfallingwithin

threemainareas:

a. Centralbankoperations

b. Bankingsupervisionand inancialstability

c. Centralbankgovernance

In2017,mostoffemale

participantscamefrom

EU-candidateandpoten-

tialcandidatecountries,

CIS,andEUnon-euro

countries.

Thelowestfemaleper-

centagewasrecorded

amongparticipantsfrom

MENAcountries.

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… 2017 Activities − Snippets of Information

Inthepasttwoyears,therateofoverallfemaleparticipationhasconsiderably

increased,slightlysurpassingtherateofmaleparticipationin2017.

LookingatthepositionwithintheirCentralBanks,juniorparticipants

(Expert/Specialist/Analyst/Supervisor)showthehighestrateofparticipa-

tion.However,theseniorones(HeadofDepartmentandHeadofDivision)

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2018

Workshop on ‘Integrating the key varia-

bles in a changing organization: ap-

proaches and tools’

(Rome, 15-16 February 2018)

In line with the event offered in 2016

[‘Building thebackboneof theorganization:

internal rules, processes and procedures’],

this new workshop discusses tools to plan,

assess and improve the organization, moti-

vateanddevelophumanresourcesandmake

the best use of technology. Looking at the

organization as a system, the workshop co-

vers the classickeyorganizationalvariables

(structures, processes, HR and technology),

highlightstheimportanceofasynergicinter-

action between them and explores their

combined role in new concepts, such as

smart working and organizational well-

being.

Speci iccasestudiesandexamples fromthe

Bank of Italy’s experience are provided on

topicssuchasthestrategicplanningsystem,

the management dashboard, the project

managementframework,andthenewobjec-

tive and feedback system. Actions for pro-

cessimprovement(includingthedematerial-

izationofinternaldocuments)isalsoshared.

Participantsareaskedtotakeanactivepart

in discussing and analysing case studies;

irst-handaccountsarealsoencouraged.

Workshop on ‘Banknote circulation, the

cash cycle and the Bank of Italy’s moni-

toring of professional cash handlers’

(Rome, 1-2 March 2018)

Theworkshopillustratestrendsofbanknote

circulation in Italyandestimationsofbank-

note requirements. The Italian cash cycle is

described, providing information on the ac-

tors involvedanddataon thecashhandling

industry.Theprogrammealsoincludes:reg-

ulatoryaspects,witha focuson theBankof

Italy’sroleinpreservingthequalityofbank-

notecirculation;theexperiencegatheredon

monitoring activities, including off-site and

on-sitemonitoringofprofessionalcashhan-

dlers; the analysis of counterfeits; and the

activityof the ItalianNationalAnalysisCen-

tre(NAC).

Workshop on ‘Supervisory activities: IT

tools for data management’

(Rome, 12-13 April 2018)

The workshop illustrates the main features

oftheITtoolsusedinday-to-daysuperviso-

ryactivityat theBankof Italy(namely,SIG-

MA for analysis, SMART formonitoring and

reporting, and Work low for managing the

work process of themain activities and the

related interventions). The workshop is

largely based on live demos of the tools, in

order to show how to manage internal and

externaldataandusethemtoextractuseful

information.

Seminar on ‘Cybersecurity challenges for

central banks ’

(Rome, 16-18 May 2018)

Cyber-attacks, vulnerabilities affecting the

con identiality of sensitive data and cyber-

ransomshighlight howone of themost sig-

ni icantrisksfacedbycorporationsandpub-

licinstitutionstodayisthatconnectedtoin-

formation technology (IT). It is, therefore,

keytoensurethatthesespeci icITrisksare

properlymanagedbyengagingwithallpos-

siblestakeholders.

Central banks are particularly concerned

about cybersecuritybecauseof their role in

preservingthestabilityoftheentire inancial

system.Togetherwithotherauthoritiesand

operators, central banks are working to in-

crease cyber-resilience at both internal and

system-widelevel.

TheseminardiscusseshowtheBankofItaly

isdealingwiththisstrategicissuefromapol-

icy, operational and audit point of view, as

wellasfromtheoverseer'sperspective.

Seminar & Workshop

Catalogue...

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2018

The Directorate General for Information

Technology illustrates how the Information

SecurityandCyberResilienceInfrastructure

management framework is being developed

and implemented, while the Internal Audit

Directoratedescribeshowcontrolsandaudit

practicesarechanginginordertostrengthen

theabilitytoaddresscyberrisks.TheMarket

and Payment System Oversight Directorate

thenprovidesanoverviewoftheimplemen-

tationintheItalianmarketplaceoftheinter-

national guidelines for banks, fund-transfer

providers and inancial market infrastruc-

tures,whosegoalistomaketheglobal inan-

cialsystemsafer.

Seminar on ‘Current issues on liquidity

and funding risk: the Bank of Italy’s expe-

rience in analysis, measurement and sur-

veillance’

(Rome, 20-22 June 2018)

Fundingarrangementslinkbankswithother

banks, inancial institutions and the non-

inancialsector.Asaresult,failureofonein-

stitutiontomeetitsobligationsinfullandon

timewillpotentiallycauseotherstobeshort

of liquidity, thus leading to a cascade of il-

liquidity. Liquidity is also inherently fragile:

marketsthatareliquidinnormaltimesmay

rapidly freeze up as conditions deteriorate,

andwhatseemslikeastablesourceoffund-

ingcanabruptlybecomeunavailable.

Against this backdrop, the seminar intends

toofferanoverviewofthetoolsusedatthe

Bankof Italy toanalyse, identifyand super-

vise liquidity and funding risks fromboth a

microandamacroperspective.

The seminar covers the following topics:

market liquidity indicators; banks’ funding

and liquidity mismatch across maturity

buckets; the re inancing risk of bonds and

marketfunding;theliquidityissuesconnect-

ed to intraday payments and settlements;

earlywarningsignals; systemicriskand im-

pactonmarketand funding liquidity; stress

test − key scenarios and trigger events (e.g.

change in rating or market disruption); the

liquidity of assets under stressed market

conditions; collateral assessment; asset en-

cumbrance; prudential measures affecting

fundingpolicies;andcentralbanks’liquidity

assistance measures and lending of last re-

sortpolicies. Ina dedicated session,partici-

pants are invited to share their methodolo-

gies and experience in analysing liquidity

risk and preparing to address liquidity cri-

ses.

Workshop on ‘Sample surveys in central

banking’

(Rome, 8-9 October 2018)

Centralbanksconductperiodicalsamplesur-

veysonhouseholds,businessesandselected

intermediaries to 1) compile aggregate sta-

tistics and 2) periodically collect cross-

sectional information which allows them to

examineeconomicagents’heterogeneityand

the distributional effects of shocks, policies

and institutional changes.Althoughnational

statisticalinstitutesareinchargeofdatacol-

lection and sample surveys, the need for

timely and speci ic information to be used

for monetary policy purposes calls for sur-

veysdirectlymanagedbycentralbanks.The

workshop reviews the Bank of Italy’s long

experience with sample surveys and high-

lights the critical issues arising in practice:

questionnaire design, sample selection and

weighting, treatmentofnon-responses,data

imputation,analysisandpublication.

Seminar on ‘Post-trading for monetary

policy and investment operations ’

(Rome, 12-14 November 2018)

Theseminarfocusesonabroadrangeofac-

tivities related to the back-of ice function

and aims at sharing best practices in the

post-tradingphaseofcentralbankmonetary

policy operations and investment transac-

...Seminar & Workshop

Catalogue...

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2018

tions. The settlement process for different

inancial instruments is thoroughly exam-

ined, aswell as issuesrelated toaccounting

andtotherelationshipwithcustodians.Spe-

ci ic sessions are dedicated to securities

lending and collateral management and to

the treatment of futures and interest rate

swaps,aswellastherelatedclearingissues.

Finally, a speci ic session is devoted to IT

platformssupportingthefront-,middle-and

back-of ice functions. The importance of a

proper management of operational risk

throughout the entire lifecycle of central

banks’ inancial transactions is a pivotal

themeofthewholeseminar.

Seminar on ’Payment systems and market

infrastructures in the EU; policy, opera-

tion, oversight. The Bank of Italy’s experi-

ence’

(Rome, 12-14 December 2018)

The seminar aims to deepen participants’

knowledgeofEUpaymentsystemsandmar-

ket infrastructures fromapolicy,operation-

al,technicalandoversightpointofview;the

Bankof Italy’sexperience fromthesediffer-

entperspectivesispresented.

Thefollowingtopicsarecovered:theroleof

the ESCB in payment and securities settle-

mentsystems;theTARGET2large-valuepay-

ment systemand theT2S (business and IT)

securities clearing and settlement system;

central banks’ collateral management and

the mobilization of marketable collateral in

Eurosystem credit operations (the Eurosys-

tem Collateral Management System, ECMS);

the post-SEPA (Single Euro PaymentsArea)

landscape−interoperabilityandreachability

inEuropeanretailpaymentsandintheBank

of Italy’s retail payment services; new Eu-

rosystemservicesinthe ieldofinstantpay-

ments,TIPS(businessandIT);businessrela-

tionshipswiththenationalbankingcommu-

nity; services offered to non-EU central

banks and international institutions; recent

developments in the regulatory framework,

atEUandinternationallevel;andtheBankof

Italy’s role in the oversight of systemically

importantpaymentsystemsaswellasretail

systemsandservices.

Presentationsarecomplementedbyavisitto

the Service Desk of the TARGET2 and T2S

EurosystemMarketInfrastructures,whichis

jointly operated by the Bank of Italy and

DeutscheBundesbank.

Workshop ‘Euro banknote production at

the Bank of Italy - outstanding features’

(Rome, February 2019, datet.b.a.)

The workshop offers a general overview of

theframeworkforeurobanknoteproduction

(referencecontextandprinciples,theroleof

the ECB and of NCBs, and Eurosystem re-

quirements for banknote production) and

provide an outline of the Bank of Italy’s

BanknotesDirectorate(resourcesandactivi-

ties,organizational set-up,andmachinery&

equipment). The main manufacturing steps

(theprintingstagesand thecuttingand in-

ishing process) will be illustrated; the pro-

grammeincludesavisiton-site.

Special attention is devoted to design and

origination (D&O) facilities and expertise

(descriptionoftheprocessasawholeaswell

as of key achievements in the ield, produc-

tion of offset and intaglio plates using the

most advanced computer-to-plate tech-

niques,andcontributiontothedevelopment

of the ES2 project) and to innovative pre-

pressactivities(coatingofpre-pressmateri-

alsthroughphysicalvapourdeposition).

...Seminar & Workshop

Catalogue

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Participation in the seminars and work-

shopsisbyinvitation.

Requests from institutions other than the

regular bene iciaries are considered on a

case-by-casebasis.

TheworkinglanguageisEnglish.Participa-

tionisfreeofcharge.

Insomecaseshotelaccommodationispro-

videdbytheBankofItaly.

Travelexpenses toand fromRomearenot

reimbursed.

Seminars usually last 3 days; workshops

last2daysatthemost.

Lunches are provided for the duration of

the seminar/workshop. A courtesy dinner

isalsooffered.

We usually accept only one representative

fromeachinstitution.

Our seminars andworkshops are as inter-

active as possible. Occasionally, selected

participants are invited to deliver short

presentations inorder to stimulatediscus-

sionanddebate.

General Information

Contacts

InternationalTechnicalCooperationandEUNeighbouringEconomiesDivision

InternationalRelationsandEconomicsDirectorate

DirectorateGeneralforEconomics,StatisticsandResearch

BankofItaly

ViaNazionale,91

00184Roma

Italy

https://www.bancaditalia.it

Tel.+390647921

Fax+390647922681

E-mail:

bdi.cooperation@bancaditalia.it

TheBankofItaly’sconferencecentre‘CarloAzeglioCiampi’

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(Seminar on ‘Balance of Payments Data

Production According to BPM6: the Experi-

ence of the Bank of Italy’, continued from

page 2) Since its inception in 1945, the IMF

has demonstrated a keen interest in develop-

ingandpromulgatingguidelinesforthecompi-

lationofconsistent,sound,andtimelybalance-

of-payments statistics. These guidelines have

been embodied in successive editions of the

Balance of Payments Manual since the irst

edition was published in 1948. In 2009 the

IMFpublishedthesixtheditionoftheBalance

ofPaymentsandInternationalInvestmentPo-

sitionManual(BPM6),buildingonthegrowing

interest in examining more recent develop-

ments in the world economy, such as the in-

creased international fragmentation of pro-

duction,thehighdegreeofcomplexityin irms’

structuresandstronginterestinanalyzingvul-

nerabilities through the use of balance sheet

data.Theimportanceofthelatterwasalsore-

lected in theadditionof international invest-

mentpositiontothetitleoftheManual,contin-

uingtheworkdoneinthe iftheditionreleased

in 1993, where for the irst time the im-

portance of international investment position

statisticswasstressed.Becauseofthecorrela-

tionbetweenexternalanddomesticeconomic

developments,inthesixtheditioninternation-

al statistical standards onBoP/IIPwere com-

pletely aligned with those on National Ac-

counts, namely the United Nations System of

National Accounts (2008) and the European

SystemofAccounts(2010).

In2014,theECBreviseditscriteriaandmeth-

odologiesforthecompilationofBoP/IIPstatis-

tics to ensure compliance with BPM6. Conse-

quently,theBankofItaly,alongwiththeother

centralbanksandnationalstatisticalinstitutes

responsible for compiling and disseminating

externalstatisticsinEuropeandtheeuroarea,

aligned theprocessofdataproductionon the

balanceofpaymentsand international invest-

mentposition to thenew international stand-

ards.TheBankofItalydecidedtoshareitsex-

perience with those countries interested in

adapting theirsystemto theBPM6standards,

byorganizingspeci icseminarsonthesubject.

Thelasteditionoftheseminarprovidedade-

tailed description of the challenges faced and

thechangesinthedatacollectionandcompila-

tion system which had been implemented in

ordertomeettheBPM6standards.

During the seminar,Bankof Italy representa-

tives gave a broad overview of data sources,

collection and compilation methodologies,

forecastingtechniquesanddisseminationpro-

cedures,with speci ic reference to each func-

tional categoryof theBoP/IIP framework.On

the last day, the focus shifted to user needs

andestimationmethodsforundeclaredassets

heldabroad.Theseminarwasanopportunity

to exchange views on the different national

perspectives and to debate constructively on

the most ef icient way of implementing the

new requirements with participants from

EasternEurope,Asia,AfricaandLatinAmerica.

In this spirit, the experts from the National

Bank of Ukraine, the Croatian National Bank,

theBankofKorea,andtheCentralBankofAr-

menia also presented their countries' experi-

ences,inordertosharetheirmethodsandthe

dif icultiesfacedwithalltheparticipants.

________________

(Workshop on ‘Financial Reporting and Op-

erating and Accounting Systems: the Case of

the Bank of Italy’, continued from page 2)

DrawingontheBankofItaly’sexperience,this

two–dayworkshopgatheredtogetheraccount-

ing experts from 20 NCBs from all over the

Seminars & Workshops (...continued)

Theviewsexpressedduringtheseminarsandworkshopsdonotnecessarilyre$lectthepositionoftheBankofItaly

Seminaron‘BalanceofPaymentsDataProductionAc-

cordingtoBPM6:theExperienceoftheBankofItaly’

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11

worldforavaluableexchangeofviews.Partici-

pantswere given adetailedpictureof thedif-

ferent inancial reporting frameworks and the

related operating procedures, along with in-

sightsintobestpracticesandthekeyelements

ofrelevantprocesses.

In particular, three main sessions examined

howoperational theorieswere translated into

practicalmeasures.The irstsessiondealtwith

inancial reporting and described the Bank of

Italy’s inancial statements, focusing on their

differentpurposes.Aninterestingpresentation

followedonthecomparisonoftheEurosystem

accounting framework with the ‘well-known’

International Financial Reporting Standards

(IFRS), which are widely applied by the at-

tendees.Thetheoreticalsessionendedwiththe

case presented by the participant from the

BankofRussia,whichproducestwoannualbal-

ance sheets, one compliant with the national

accountingstandardsand theotherwith IFRS,

whichconsiderstheBankofRussia‘asagroup’.

Thesecondsessionwasdedicatedtotheoper-

ating and accounting system, illustrating its

framework,historyandorganization.Thefocus

wasontheBankof Italy’sexperience inbuild-

ingupanoperatingandaccountingsystemful-

ly in line with the Eurosystem requirements

andinparticularwiththeneedtoproducereli-

ableaccountingdataonadailybasistobesent

to the ECB for reporting and monetary policy

purposes. The session was enriched by the

presentationofarepresentativefromtheCzech

NationalBank.

The results of a survey of participants before

theworkshopwerealsopresentedtohighlight

thedifferentaccountingandreportingsettings

adopted by the central banks in attendance.

Specialattentionwaspaidtothegovernanceof

theyear-endactivitiesandtheproandconsof

the Eurosystem accounting rules compared to

theIFRS.

The third session,whichwas held on the sec-

ondday, set out to answer thequestion: ‘how

can the accounting rules be implemented?’.

Bank of Italy experts explained, using exam-

ples,therecognitionrulesandthemaindiffer-

ences between the cash/settlement approach

andtheeconomicapproach.Aninterestingcase

studybasedonarealaccountingproblemchal-

lengedtheattendees,whichweregroupedinto

three teams. In particular, the case study fo-

cused on the accounting treatment of the sec-

ondseriesof targeted longer-termre inancing

operations (TLTRO2s) launched by the ECB

and their interplay with the current negative

interest rate environment. The three groups

proposed three different solutions, demon-

strating the complexity of the problems cur-

rentlychallengingtheaccountingfunction.The

analysisofthisspeci icissueprecededthe inal

presentation, which gave a more general de-

scription of the unconventional tools adopted

by the ECB to tackle the inancial crisis, and

their implications for the inancial reporting

andaccountingsystems.

In conclusion, since the onset of the inancial

crisisin2007,manycentralbankshaveimple-

mented unprecedentedmonetary policy inter-

ventions that have strongly affected their re-

porting functions. Thanks to innovative solu-

tions, central banks have sidestepped the ef-

fectsoftheglobal inancialcrisisandmostlike-

lywillbecalledontode inenewinterventions

in the future. In this complex context, the ac-

counting function can be seen as a living con-

structionsite;everydayrepresentsanewstep

alongtheroad,but there isplentyofroomfor

learning by implementing new processes for

better and more transparent inancial report-

ing.

________________

Theviewsexpressedduringtheseminarsandworkshopsdonotnecessarilyre$lectthepositionoftheBankofItaly

Workshopon‘FinancialReportingandOperatingandAc-

countingSystems:theCaseoftheBankofItaly’

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(Workshop on ‘Macroprudential Analyses

and Supervision’, continued from page 2)

Theworkshopprovidedtheopportunitytoex-

change viewson the approaches implemented

bytheBankofItalyandtheparticipatinginsti-

tutions.

The introductory session was dedicated to an

illustrationoftheframeworkformacropruden-

tial supervision in Italy and in Europe. This

providedanopportunityforsharingexperienc-

es on models and indicators used to assess

risks to inancial stability. A presentation fo-

cusedon themain featuresof theBankof Ita-

ly’s Financial Stability Report (FSR), which is

released twice yearly and is a key instrument

forpolicycommunication.Thereportprovides

informationonthestateofthe inancialsystem,

identi ies themain domestic and external risk

factors,assessestheirpossibleimpacton inan-

cialstability,andthescopeforapplyingmacro-

prudentialpolicymeasures.Anotherpresenta-

tionaddressedtheongoingprojectforthecrea-

tionofaRiskDashboardtobeusedforthereg-

ularmonitoringofthebuildupofrisks,comple-

menting the analytical tools for identifying

risksto inancialstabilityandaguideforpossi-

ble macroprudential policy actions. The mi-

crosimulationmodelsemployedtomonitorthe

inancial vulnerabilities of Italian households

and irms and the early-warning models for

evaluatingrisksstemmingfromtherealestate

marketwerealsoillustrated.

Attentionwasdevotedtoinstrumentsandpoli-

cies designed to manage risks arising from

credit growth. An overview of the technical

challengesposedbythedesignofthecounter-

cyclical capital buffer (CCyB) framework was

given. Examples from countries’ experience

highlighted the range of practices adopted to

implementtheanalyticalandpolicyframework

fortheCCyB,focusinginparticularontheItal-

ianexperience.Participantsbroughttheirindi-

vidual experience to the workshop, comment-

ing, for example, that the stricter criteria for

grantingloanstohouseholds(suchasPayment

-to-Income and Loan-to-Income ratios) ap-

pearedtohavebroughtdowntheratioofhigh-

lyindebtedborrowers.

Italy’sexperience in identifyingglobalanddo-

mestic systemically important banks, G-SIIs1

andO-SIIs2 in the EU,was also discussed. For

systemically important domestic banks, atten-

tionwasgiventotheuseofmandatoryandop-

tional indicators as set by the EU rules. Great

interestwasshowninthecalibrationofbuffer

requirements and, in particular, bucketing ap-

proaches.Considering that theEuropeanO-SII

frameworkisrelativelyyoung(asindeedisthe

entire macroprudential response to the inan-

cial crisis), the experience gained during the

earlyyearsofapplicationwillcontributeto its

re inement and enhancement in the near fu-

ture.Indeed,oneofthelessonslearnedsofaris

thatinthis ieldthereisnoone-size- its-allso-

lution, and that national peculiarities should

continuetoplayarole.

Finally, theworkshopconcentratedon theuse

of stress tests for both macroprudential and

microprudential purposes. Macroprudential

stresstestsareavaluabletoolforassessingthe

inancialresilienceofbankingsystems,asthey

allow foramoredirectevaluationof feedback

loops, ampli ication mechanisms and spillo-

vers. Stress tests can alsobeused to calibrate

macroprudential measures. The use of stress

testoutputsinthislatter ieldisstillaworkin

progress.Regardingthemicroprudentialuseof

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stress tests, anoverviewof thedifferentprac-

ticesadoptedbytheSSMfortheintegrationof

the stress test results in the Supervisory Re-

view and Evaluation Process (SREP) was pre-

sented.Given thedifferentnatureof the exer-

cises performed in the irst years of the SSM,

the methodological choices re lected different

solutions, dependingon thenature, scope and

riskcoverageofthestresstest.Giventhecom-

plexityandmultifacetednatureof supervisory

stresstests,theSSMisstillintheprocessofde-

ining a long-term strategy in order to make

them better suited to supervisory needs. The

presentations indicated that the stress testing

frameworksshouldhaveclearlyarticulatedob-

jectivesandincludeeffectivegovernancestruc-

tures.Resources,organizationalstructures,and

information systems should be adequate to

meettheobjectives.Finally,stresstestsneedto

becriticallyevaluatedandproperly integrated

in supervisory and/or inancial stability pro-

grammesandtobeusedalongwithotheravail-

ableanalyticaland/orpolicyinstruments.

The workshop bene ited from the presenta-

tionsoftheparticipantsfromtheCentralBank

ofRussiaandtheCentralBankofHungary,re-

spectivelyon thecountercyclical capitalbuffer

andthedebtcaprules.

____________________1GlobalSystemicallyImportantInstitutions.

2OtherSystemicallyImportantInstitutions.

________________

(Seminar on ‘Monetary Policy Implemen-

tation and Liquidity Management’, contin-

uedfrompage2)Againstthisbackdrop,the

seminar provided participants with an in-

sightintothemeasuresimplementedbythe

Eurosystem in the last decade to ward off

the risks arising from the global inancial

crisis, the sovereign debt crisis, and a pro-

longedperiodofsubduedin lation.Thesem-

inar also touched on the governance of the

Eurosystem so as to clarify the role and

functions performed by national central

banks togetherwith theECB,withaspecial

focus on the Bank of Italy’s contribution to

the implementation of monetary policy in

theeuroarea.

Three sessionswereheld involvingBankof

Italy experts from several business areas

(market operations, research, market over-

sight, risk management, and supervision).

There were also presentations by guest

speakers from the central banks of Jordan,

Brazil, andBulgaria aswell as opendiscus-

sionstoshareexperiencesandopinions.

The irst session startedwith the presenta-

tionof themain featuresof theEurosystem

monetarypolicystrategytoshedlightonthe

rationalebehindtheso-calledunconvention-

al monetary policy measures (e.g. the ixed

rate full allotment tender procedures, new

collateral eligibility criteria, longer term

creditoperations,assetpurchases,etc.)and

the connections between these measures

and the transmission mechanism. The ses-

sionalso focusedon theoperational frame-

workandonhowitchangedthroughoutthe

crisisaswellasonriskmitigationmeasures.

Originallybasedonastructuralliquidityde -

icitowing to theminimumreserve require-

mentanddevelopmentsinautonomousfac-

tors, the operational framework turned out

tobebasedona large liquiditysurplus fur-

thertotheimplementationofunconvention-

almonetarypolicymeasures.Whattheoper-

ationalframeworkwilllooklikeinthefuture

isstillopentodebate;however,itisofpivot-

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dityManagement’

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14

alimportanceatthisstagetounderstandthe

main market and regulatory developments

thathaveemergedinrecentyears,whichare

expected to matter for the implementation

ofmonetarypolicyinthefuture.

The second session of the seminar devel-

opedthesetopicsfurther.Markettrendsin-

clude the shift from unsecured to secured

transactionsinmoneymarketsaswellasthe

greater role of agents other than banks,

which could inprinciple in luence a central

bank’s ability to steer money market rates.

Regulatory developments encompass new

liquidity (LiquidityCoverageRatio,NetSta-

bleFundingRatio)andcapital(LeverageRa-

tio) adequacy rules, which proved to have

someimpactonbanks’demandforliquidity

(includinghigh-qualityliquidassets).

The concluding session had the goal of in-

creasing the awareness of the inancial and

reputational risks faced by central banks

andtheimplicationsforbalancesheets.Asa

matteroffact,unconventionalmonetarypol-

icy measures have dramatically altered the

size and composition of central banks’ bal-

ance sheets over the last decade, exposing

them to risks that must be managed. This

session described the main features of the

assetandliabilitymanagementmodeldevel-

opedbytheBankofItalyaswellasportfolio

management techniques, to provide an in-

sight into the interconnections between

monetary policy implementation and other

centralbankfunctions.

________________

(Workshop on ‘Customer Protection in

the Banking Sector – The role of the Bank

of Italy’, continuedfrompage2)Thework-

shop held in Rome on 4 and 5 December

2017focusedontheroleoftheBankofItaly

asoneoftheItalianauthorities inchargeof

inancialconsumerprotection.

The workshop was organized in three ses-

sions.

The irstsessionwasdevotedtointroducing

the Italian framework for inancial consum-

er protection and describing its evolution

overtime.Intheopeningspeech,itwasout-

linedthetheoreticalunderpinningsof inan-

cial consumer protection and the new per-

spectivesarising frombehavioural econom-

ics, and it was stressed how necessary a

propersystemof inancialconsumerprotec-

tionwas for restoring trust in the inancial

sector.Thepresentationsthatfollowedcon-

cernedtheevolutionoftheItalianregulatory

framework in light of EU legislation; the

publicenforcementsystem implementedby

the Bank of Italy and the tools it relies on,

withafocusontheincreasinguseofthemat-

ic reviews to foster proactive and effective

supervision to prevent harm to consumers;

thecurrentdevelopmentofamodel for the

assessment of customer protection; the

changing approach to on-site inspections;

the administrative penalties system, as re-

centlyrenewedinthewakeofimportantre-

formsatEUlevel.

Thesecondsessionprovidedanoverviewof

theBankof Italy’s role in the ieldof inan-

cialliteracyoverthelasttenyears,inpartic-

ularthenewNationalStrategy.Recentinitia-

tives in this ield go beyond the traditional

approach–basedon ‘teachingtheteachers’

and targeted at young students – and aim

instead to respond to the needs of adults,

especiallyinthemostvulnerablecategories.

The third session was dedicated to sharing

experiencesandtookadvantageofthestim-

ulating contribution from Israel and Brazil,

whose delegates presented their superviso-

ryapproaches in the ieldofconsumerpro-

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tor–TheroleoftheBankofItaly’

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15

tection.Thepresentationswerefollowedby

a veryproductive tourde table,which con-

irmed how important the proper handling

of complaints is for central banks that are

alsoinchargeof inancialconsumerprotec-

tion,inordertodetectrelevantissuesandto

dealwiththematanearlystage.

Presentations followed on the Arbitro

Bancario Finanziario (ABF), the Italian Fi-

nancial Ombudsman scheme set up by the

BankofItalyin2009.Afterrecallingitsmain

features – independence, impartiality, cost

effectiveness – some facts and igureswere

supplied tohelpparticipantsgaugehowef-

fective the system has proved to be; there

were also some remarks on the interaction

between the ABF and the public enforce-

mentdutiesdirectlydischargedbytheBank

of Italy. The session included a brief sum-

mary of the activities theBank of Italy car-

riesoutinthe ieldofanti-moneylaundering

andcounter-terrorism inancing.

Questionsanddebatewerestronglyencour-

agedthroughoutthesessions;asaresult,the

workshophasproved tobeaveryeffective

forumforsharingexperiencesfromauthori-

ties with different social and institutional

backgrounds.

Financialconsumerprotectionisamongthe

duties supervisory authorities have most

recently taken on. Establishing informal,

frank and open interaction among national

authorities to exchange insights and com-

pare different approaches proved to be of

extraordinary use, and encourages further

coordinationefforts.

Theviewsexpressedduringtheseminarsandworkshopsdonotnecessarilyre$lectthepositionoftheBankofItaly

‘Eachandeverysessionbene$ittedmeinthecapacitybuil-

dingofmyorganization.PlusItrulyappreciatethenet-

workingthathasdevelopedwithinBoIaswellasthecoun-

terpartsfromothercountries’

AparticipantfromBankNegaraMalaysia

B<=>?@IA<BC-I=ADE=<AF?=<BADGH=FG<BG??IDE<AF?==DJKBDAADE

DirectorateGeneralforEconomics,StatisticsandResearch

ViaNazionale,91

00184Roma—Italia

Tel.+390647921

Youtube.com/bancaditalia Google.com/+BancaditaliaEurosistema @Uf$icioStampaBI

www.bancaditalia.it

This issue was prepared by:

MagdaBianco,GiovanniCandura,FedericaCiocchetta,MiriamDiBattista,MariaAlessandraFre-

ni,PietroGiammario,RosarioGrasso,VincenzaMarzovillo,ValentinaMichelangeli,SalvatoreNa-

sti,GiovanniPalmisano,SilviaSabatini,AlbertoMariaSorrentino,MiriamTagliavia.