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MNI: BOI Rossi - Financ'l System Must Change To Support Growth

MNI (London)
--Banks, Firms To Cooperate More Fully In Future Capitals Market Union 
By Silvia Marchetti
     ROME (MNI) - Bank of Italy deputy governor Salvatore Rossi said Wednesday
that the country's financial and business sectors both needed to modernize in
order to support growth and become leading players in Europe's future Capitals
Markets Union, which is facing a stalemate. 
     Talking at the 49th Credit Day in Rome, Rossi warned that Italy's firms
still relied too heavily on banks for credit and that such a "bank-centred
system" stood as a factor of risk during economic crises. 
     Despite a few recent improvements, "Italy's financial structure has not
made much progress and our system is excessively centred on financial debt and
too little on risk capital," he said. 
     "Growth feeds on innovation, which is a riskier proposal than proven,
traditional productive activity, and it is best to finance innovation with
capital rather than loans, especially bank loans, because banks are and must be
more risk adverse than the rest of the financial community," argued Rossi. 
     Financial firms should instead contribute in making cyclical growth
structural and sustainable by supporting businesses in creating new jobs, he
     Rossi argued that the evolution of Italy's financial and industrial sectors
were linked: "The financial structure must change if we also want the productive
economy to moves towards greater growth".
     He also argued that Italian banks must prepare to play a greater role in
the creation of the European Capital Markets Union by boosting their efficiency
and supporting firms in accessing other financing instruments. 
     "The opening-up of firms to international investors and the development of
a non-banking financial industry are among the main objectives of the Capital
Markets Union", said Rossi, who noted however that its full implementation was
being delayed by "uncertainties and tiring negotiations typical of all European
     In order to meet future challenges and grasp the opportunities of the
Capital Markets Union, according to Rossi Italy must "move quickly" to avoid
being caught unprepared, lagging behind other EU countries, when the project
will effectively kick-off. 
     Recent measures adopted by the government to support credit flows to the
real economy, including individual savings plans and the launch of special
purpose acquisition companies (SPAC), are not enough and more needs to be done. 
     "These are all interesting signs, but they must take root. Italy's entire
financial system must change and support the best, most innovative businesses by
helping them grow. The Italian economy's future depends on this", said Rossi. 
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: M$E$$$,M$I$$$,M$X$$$,MC$$$$,MI$$$$,M$$EC$,MGX$$$]
MNI London Bureau | +44 203-865-3812 |

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