The complete speech by the President of Consob, Paolo Savona, at the Market

15 June 20213 years ago babelfish

With great pleasure we present the monumental speech of the President of Consob, prof. Paolo Savona, at the Market. As you can see, the President's vision is always extremely lucid and presents himself as one of the few who can speak, with knowledge of the subject, of advanced topics such as cryptocurrencies and Fitech.

Enjoy the reading.

Index

The operational framework in which Consob has moved
A difficult year: savings and exports have withstood the brunt of the crisis
The emergence of financial innovations
Knowing to deliberate

The operational framework in which Consob has moved

The Consob Report on the year 2020, which we are presenting today, was sent at the end of March to the Minister of Economy and Finance pursuant to Law 216/1974 and was published in full on our website. It takes into account the activity carried out last year and the first months of 2021, a period of time characterized by the constraints posed by the health crisis to the remote services of the 660 people who work in the institution, by the burden of a regulatory activity the economic and financial effects of the pandemic and the adjustments required by the new market realities. To the staff who, in the difficult circumstances, remained at the service of the community with a spirit of adaptation and professionalism, my heartfelt thanks go.

The size and variety of the activities carried out in implementation of the strategic guidelines – detailed in Part A of the Report – do not lend themselves to a summary and require a detailed examination of the contents; to make it easier to read, this year the presentation is in a leaner form than in the past. However, some indicators can provide a picture of the breadth and multiplicity of the tasks carried out: in the year under review the number of Commission meetings was 110 and the cases examined 1,297; the decisions taken were 459, among which worth mentioning are the 26 decisions to deal with the difficult situation that has been created on the market as a result of health pandemic, the 237 closures of websites that illegally harvested savings (on a total of 467 sites closed from 1 July 2019 to 10 June 2021) and the 56 sanctions for violation of financial regulations. The Arbitrator for Financial Disputes resolved 1,772 appeals.

During the year, ESMA's work aimed at creating a common basis for regulatory treatment also required a particular commitment in view of the creation of a European Union of capital markets; in this regard, we note the anomaly of the void at the top of the institution caused by the complexities created in the appointment of the President, who has ceased from office for several months now. A strong commitment also required following the complex works for the development of ESG regulations ( governance for environmental and social protection) for a green, digital and resilient Europe and to incorporate the technological developments of international markets into existing legislation. financial matters; the broad involvement of the competent national authorities was appreciated for these initiatives. It is desirable that similar coordination can also be achieved with the European prudential supervisory authorities, especially in the event of events that are important for the proper functioning of the Italian financial market. In the second half of the year, the commitment was added to manage the presence of British companies operating in Italy, or wishing to enter our market, following the exit of the United Kingdom and Northern Ireland from the European Union.

In the first months of 2021, following the consent given by the Presidency of the Council of Ministers to the proposal made by Consob, the long administrative process was completed to implement the criteria set by the similar contract of the Bank of Italy in the treatment of personnel, as provided for by our institutive law; a no less extensive process is now opening up to implement equalization. The non-objection was also issued for the transfer of the Borsa Italiana Group from the London Stock Exchange Group to the Euronext Group, which will be followed by continuous monitoring by Consob on the operational impacts of the operation in implementation of the Integration Plan and the Industrial Plan on a federal basis. provided for in the agreement between shareholders. Finally, a first concrete step was taken to control the emissions and trading of digitized financial instruments, experimenting with the use of an access key to the blockchain of a leading Italian company in preparation for the issuance of security tokens .

In this complex action we have had constant consultations with the MEF, the Bank of Italy, the AGCM, IVASS, COVIP, the criminal, civil and administrative judiciary, the State Attorney, the Guardia di Finanza, the Police post office and the OCF and benefited from the collaboration of the COMI, the Committee of Market Operators and Investors. Our deepest gratitude goes to all these institutions.

A difficult year: savings and exports have withstood the brunt of the crisis

Due to the pandemic, 2020 was one of the worst years experienced by Italy on an economic and social level since the end of the Second World War. The European Union and Italy have activated a wide range of economic policy instruments to control the effects of the emergency situation, also by engaging existing structures in new tasks. After having registered a significant fall in GDP, the country has started towards economic recovery since the second half of the year and, more clearly, in the first months of 2021, and shows its will to tackle the unsolved problems, also making use of the change. tax policy attitude of the European Union, a necessary foundation for cohesion between member countries.

The results of the year confirmed the assessment expressed in previous speeches that savings and exports are the two pillars of the country's social and economic strength. The protection of savings carried out by public institutions, including Consob, follows rules that have been tested and perfected over time, which however require updating in the light of technological innovations in the financial sector; the most solid protection, however, remains its anchorage to real activity, the progress of which is shaped in Italy by the trend of exports. Private consumption and public spending, on the other hand, show that we do not have the boost they have in other important foreign economies.

The saving rate of Italian households compared to disposable income increased by 50 per cent during the year but, excluding savings invested in listed companies, its yield remained rather low, close to zero. Considering the consistency of financial assets in the hands of families, each percentage point of remuneration can be estimated in the order of about 30 billion euros, almost 2% of GDP, the size of a good budget maneuver in the past. Taking into account the operating costs, savings contributed significantly to sustaining the stability of the markets, without however having produced the real growth expected from its "euthanasia" hypothesized by Keynes, even if this effect is now the result of a crisis that arose for reasons peculiar and contingent.

Exports experienced difficulties, reducing in volume by about one seventh compared to 2019, due to the concomitant effect of the decline in world demand and the obstacles to internal production due to the lockdown . Imports fell more markedly, allowing the current account balance of our foreign balance to remain positive, slightly increasing relative to GDP. During the year, Italy's foreign equity position improved further, presenting assets for the first time in three decades. The international financial market has only partially registered this favorable structural position of the country. In the first quarter of 2021, world trade reached levels above pre-crisis levels and our exports continued at double the growth rates, confirming the resilience and dynamism of our companies in the sector. The balance of the financial account with foreign countries, which had registered a slight negative balance in 2020, also turned positive, confirming the role of pillar of the stability of our savings.

To cope with the economic and social difficulties, the public debt has grown considerably, albeit in forms other than those that an emergency state would have required. Confidence in the Italian economy's ability to react has however grown, as evidenced by the significant reduction in the spread between the interest rates of BTPs and BUNDs. This result is also the result of the decisions taken by the ECB to purchase significant volumes of government bonds and by the European Commission to suspend, albeit temporarily, the Stability Pact and to launch the Next Generation EU Plan (NGEU). We agree with the assessments given for all these decisions on the structural improvement of our real growth rate and, consequently, of the systemic stability of our economy.

For the continuation of the phase of relaunching production activity, however, it is necessary to integrate the decisions taken so far to incentivize companies' risk capital in order to improve their financial leverage and make them more willing to undertake new initiatives. The tax reform urged for some time and reaffirmed in the framework of the PNRR, the National Recovery and Resilience Plan in implementation of the NGEU, offers an important opportunity if it is assigned the task of considering the productive demands on the same level as the ethical ones in the assessments of distributive equity.

The awarding of the Nobel Prize in Economics 2020 to Robert Wilson and Paul Milgrom brought to the attention of the rulers the principle of the "Pareto optimum", according to which there is a point in the redistribution of income reached which the improvement of the well-being of some not it can be achieved without causing the worsening of that of others. Obviously, the principle applies both to present generations and between these and future generations. The Pareto optimum is reached more rapidly when there is no real growth, as occurred following the medical lockdown ; we must therefore wait for it to rise following the recovery in progress.

State intervention for social purposes reached unusual forms and levels during the year, without however alleviating the pressure on public resources by citizens; this should not be surprising because the rational content of human action leads us to choose to obtain the best result at the lowest cost. Private companies, especially if they are exporters, are forced by competition to solve their problems without delay, on pain of exclusion from the market; this capacity represents a cornerstone of growth and a foundation for the proper functioning of democracy, which has the power to correct the distribution of income determined by productive and commutative activity through regulations, taxes and fees. When these forms are insufficient and savings are not used by private individuals, the State resorts to debt, but not always following a well-founded assessment of the intergenerational redistributive effects.

Recognizing that the market and democracy control the respective functions performed and the exact knowledge of the value to be attributed to each is an indispensable step for the proper functioning of the economy and society, whose care must be entrusted to a good system of civic education. .

The emergence of financial innovations

Important official documents have thoroughly analyzed the difficult internal, European and international framework within which everyone must move. We share the advanced diagnosis and express the hope that it will be endorsed by public opinion and transmitted to the mandate it attributes to the political forces.

We intend to integrate, within our skills, the advanced diagnosis with the indication of the role that the creation in articulated forms of new virtual instruments, such as cryptocurrencies , and the interchangeability between them and with traditional instruments plays on the savings market . The effects on the protection of savings and on the distribution of income itself appear significant and require an exact understanding in order to urgently follow up a regulation that fills the gaps revealed by this.

On the basis of the yardstick offered by current legislation, it is no longer possible to distinguish, with technical and legal certainty, what today legally consists of money and financial products, a content that is interrelated for the connection guaranteed by the conversion platforms between virtual instruments. and traditional. The market uses a different yardstick from that of the existing legislation, which requires to be integrated into it. The activity in transferable forms that takes place in the infosphere is also increasingly interfering with international relations and geopolitical balances, whose stability plays an important role for monetary and financial exchanges, especially as a result of the growing weight they have in a political habitat no longer at the best of the results of peace and prosperity achieved in the last thirty years of integration and cooperation between states.

A necessary step to focus on the object to be adjusted is to clarify the meaning of the terms used. Here we have resorted to the usual dichotomy between traditional and virtual instruments; for the latter the term digital is also used, which however embraces both the now traditional forms (such as credit cards, ATM dispensers of physical money and online payments), and the more recent ones of payments or exchanges in encrypted instruments; it is the latter that create new problems for the functioning of the markets due to the relationships they establish with traditional and digitized tools, making their regulation and surveillance difficult, with distorting consequences on production and exchange, as evidenced by the fact that a single Bitcoin recently had the opportunity to purchase a large-displacement electric car and soon afterwards lost half of its purchasing power.

Financial information technology is a prodigious lamp from which the Genius has emerged.

The authorities will not be able to bring it back inside, because it acts in the immaterial sphere (or infosphere) that can only be controlled by changing the information exchange protocol, that is, fragmenting the unity of the world market and thus reducing the rate of international competitiveness. The pyramid of bits , the unit of measurement of information technology, has grown enormously and has penetrated the market for traditional instruments, losing the territorial contact implicit in their treatment on a legal basis.

Under the current conditions, the authorities can intervene by becoming active parties in the infosphere, that is, they too use the advantages of digitized techniques; their action will be more effective if they cooperate with each other but, in order to reach the goal, they must first understand the limits and possibilities in the use of new technologies that data science and that of networks are developing at a fast pace. Under the conditions that have established themselves on the market, only warnings about the risks run by savers or the prohibitions themselves are ineffective.

The current system of crypto instruments is based on the dominant conviction and convention between private individuals, who ignore the central role that the legal nature of money as the only means of exchange and debt release plays in the proper functioning of the market. The will expressed in several places by the government authorities to want to seize the opportunities of technological innovations should not be understood as a condescension towards the loss of transparency of the market, but the desire to recover it by making use of the same financial innovations; therefore the favorable attitude to new techniques must be accompanied by clear rules on the birth and trading of crypto instruments and on their intertwining between traditional monetary and financial assets / liabilities, whether they are already digitized or not, as an indispensable guide for operators who manage the liquidity and savings.

The creation via computer of private fiduciary money offers those who make it (the so-called "miners") the possibility of having a purchasing power. Richard Rasmussen, an economist whose analyzes span a broad spectrum of biological and social issues, wrote that "it would be extremely ridiculous to really apply to prove that wealth consists of money, or gold and silver, and not that. that money buys ". The redistributing function, typical of democracy, and the productive-commutative one, typical of the market, are altered by the creation of digitized purchasing power, even more so if placed in perfectly decentralized accounting. Despite their importance in social balances, the ethical implications of financial innovations on the functioning of democracy have so far received less consideration than other aspects of the problem, such as the digital divide , privacy and the right to free private initiative.

At the time of birth, the purchasing power of virtual instruments is non-existent, as they do not have an economic debt and credit relationship behind them, like any other operation that takes place on the market, including the creation of legal money that sees a public institution of issue. The debt and credit relationship only becomes concrete when there is an expectation that someone will spontaneously accept the virtual instrument created and can resell it to others at the appropriate time. Only the exchange operations carried out after having “mined” the cryptocurrencies generate a relationship to be entered in double-entry accounting, as taught to us half a millennium ago by Friar Luca Pacioli; but the real responsibility of the "secondary" debtor is still uncertain, having at its root the absence of a "primary" debtor.

The change affecting the functioning of the market in general is profound. The spread of virtual instruments has prompted the creation of the aforementioned "technological platforms" which allow faster and cheaper ways of accessing payment and trading services in securities than those offered by banks and other intermediaries. The custody and exchange functions they initially carried out have evolved to accommodate increasingly articulated and complex transactions, including the granting of loans guaranteed by their own or others' virtual instruments or the stipulation of derivative contracts using cryptocurrencies as collateral , even for more operations of the same type. These new market segments are rapidly evolving and the experience prior to the 2008 crisis seems to be repeated, when derivative contracts developed to ten times global GDP, taking on complex forms that received a high rating . Even with the necessary distinctions, it is foreseeable that something similar is happening in the market for virtual monetary and financial products, especially cryptographic ones.

More than the tool itself, the problem arises from the technology used, the blockchain or decentralized accounting chain. Its original form, the one used by Bitcoins in 2009, is a circuit whose information remains confined exclusively between holders of the crypto instrument, identified by a numerical code; transactions are certified by the mechanism itself, without the intervention of an external entity (such as banks for deposits or financial intermediaries for credit instruments).

As far as is known about the state of hacking techniques, the original blockchain is impenetrable, while the one used by other cryptocurrencies is not, as evidenced by events that have already occurred for even significant amounts; these other forms have reached sophisticated solutions to protect themselves from external attacks, however they are still penetrable but, in the conviction of those who use them, the risk is compensated by the advantages that come to achieve other purposes, such as creating the so-called smart contracts . The fact remains that they remain on the edge of the uncertainty of being inside or outside the perimeter of legality, especially if they include the use of cryptocurrencies . To grasp the breadth of the possibilities developed by decentralized accounting technicians, the acronym DLT ( Distributed Ledger Technology ) is used, of which only experts ( professionals ) are aware of the real contents, but not ordinary customers ( retail ). which, if accessed, is in fact less protected.

The use of these tools in the forms closed to the outside of the participants in the initiative ( permissionless ) precludes private supervision (such as that carried out by the boards of statutory auditors and certification companies) or public (by the supervisory authorities). Without adequate safeguards (regulations and bodies), the result is a worsening of the transparency of the market, the foundation of legality and rational choices of operators. Among the well-known negative effects is the shielding that these techniques allow for criminal activities, such as tax evasion, money laundering, terrorist financing and kidnapping. The concentration of ownership of Bitcoin that has recently been ascertained may reflect this aspect of the problem.

The river now full of virtual instruments has been divided into many and varied streams: the Internet, which is certainly not the cradle of certainties, certifies that there are four to five thousand cryptocurrencies in circulation (in the form of stable coins , but largely floating ) which operate more or less undisturbed; if they are subject to the experience in a short time by Consob in Italy obscuring hundreds of websites that illegally harvested savings, the resulting picture is worrying.

For Italy, the problem raised presents a particular notation compared to other countries due to the existence of a norm at the constitutional level which attributes to the Republic the task of encouraging and protecting savings in all its forms and of regulating, coordinating and controlling the exercise of credit. It would be improper if the specification of "savings in all its forms" and the credit to be protected were assigned a content that also embraced virtual instruments, without going through specific regulations.

An important task entrusted to Consob is to guarantee the most complete and reliable information, as an indispensable viaticum for the proper functioning of the financial market, a necessary, although not sufficient, condition to encourage savings and anchor it to real activity; this is an important frontier to reach, but it moves forward all the time. The task becomes more and more difficult due to the enormous amount of information that is formed daily and can only be managed by resorting to the collection and processing techniques made available by Data and Network Science, because every day a mass equal to 2 is produced. , 5 quintillion bytes (10 ¹⁸ ), treatable only with scientific methods, not being able to do it with the human mind alone.

Added to these objective difficulties for the supervisory authorities were the recent judgments of the European Court of Justice of 2 February 2021 and the Italian Constitutional Court of 30 April 2021, which recognized "the right of anyone who is subjected to proceedings that could lead to in the imposition of punitive sanctions for not being obliged to provide the required information to the supervisory authorities ”, in the name of the constitutional principle of due process. However, the rulings do not reduce the obligation for operators to disclose information to the market. The constitutional value of the fair process must be placed on the same level as that of the protection of savings.

The need to define rules on the subject is not felt by the supervisory authorities alone, but also by the most attentive market operators, who recognize the existence of risks for their cryptocurrency activities deriving from decision-making uncertainties or inaccuracies; these not infrequently arise from even noble ethical instances, on which discussions abound and often end in a sense contrary to the use of innovations in finance. As history teaches, every technological revolution causes cultural and social consequences, without however stopping their affirmation; the development of virtual instruments seems to confirm this experience.

If the regulation were limited to putting sand in the mechanism and, as is widely discussed, being satisfied by taxing the gains obtained, the consequence could be the continuation of their diffusion which could lead to a new market crisis. If this happens, the responsibility for the consequences suffered by savers could fall on the State, as has already happened in the past, due to the silent or obvious legitimation of their existence and the awareness that market manipulations can be carried out through financial innovations.

The security of the techniques used remains the open side of all digitization processes and it is therefore reasonable to consider cybersecurity a "public good", that is a productive and social infrastructure placed at the service of general interests, but useful for each citizen. Therefore, the existence and functioning of a security system, even if left to private individuals, must be guaranteed and supervised by the State, which must however keep in mind that the spread of digital techniques in finance poses specific needs that must be addressed globally, under penalty of reduction of its effectiveness. The topic of cyber security embraces political problems of even broader content, whose solution cannot be reached at the national level and requires close international collaboration, that is the birth of a "global public good", as the IMF was, the UN and the WTO. The part of the Bretton Woods Agreement closest to the solutions of the problem raised here of the interchangeability between different national currencies has not withstood the test of international cooperation, but the technological innovations applied to finance have re-proposed the urgency of its relaunch in key topical.

On cyber security, as on every other aspect of the digitization of money and finance, many European countries are moving autonomously and independently from the regulatory process underway, in which they themselves participate. For the initiatives in which the national authorities have participated directly or without ruling on their content, not all the details are known, but it is known that they have taken care to keep the information by entering the decentralized accounting circuits (or blockchain permissioned ). In other words, they have provided an access key of the type tested by Consob, which was mentioned at the beginning of the Speech . But this is only the first step in a long process.

The retrieval of information by the authorities raises the delicate problem of establishing who is authorized to be present in the decentralized mechanism and within what limits it can use the data it becomes aware of; that is, how to guarantee the secrecy of the data and the use made of it, both problems that must be solved in the context of the necessary legislation.

On the use of virtual instruments, conflicts have already arisen between private individuals and between them and some supervisory authorities, which have led the courts involved to have to pronounce themselves on specific cases on the basis of current legislation. The judgments introduce changes in the regulatory framework within which the supervisory and control authorities and the market itself are obliged to operate. After a long period of reflection and decision-making uncertainties, many national government authorities appear to be oriented towards solving the problems that have arisen in the context of a new regulation.

In the United States, the Controller of the Currency, the Security Exchange Commission, the Federal Deposit Insurance Corporation and the Commodity Future Trading Commission have recently decided to jointly address the problem, but at present they are still at the stage of evaluating what to do. Among the decisions taken in the absence of specific legislation is that of the SEC which granted a company that intends to use the blockchain a no-action letter to certify the deals it intends to implement, without however formally approving its activity. One of the arguments advanced by some operators is that they limit themselves to making available an accounting technique, renamed DeFi ( Decentralized Finance ), which is used by offerers and buyers of virtual products, i.e. subjects subject to supervisory regulations, on which responsibility for decisions transferred; this is a similar argument to the one put forward by the rating agencies after the derivatives crisis which had subprime credit as collateral . The legitimacy of the use of cryptocurrencies has had its full recognition with the authorization granted to an American exchange platform to be listed on the Nasdaq technology exchange.

In the European Union, the ECB has proposed the creation of a CBDC, Central Bank Digital Currency (or cryptoeuro ), moving its implementation forward in time. The European Commission has put forward a Digital Finance Strategy, submitting it to Parliament for consideration and opening a wide consultation between operators. The Portuguese Presidency is accelerating the approval of the MICA ( Market In Crypto-Asset ) program, not always according to the guidelines suggested here. However, some experiments or decisions by Member States are already underway: the Bank of France has carried out a nationwide creation operation of self-extinguishing crypto euros , as part of the process of placing virtual (or tokenized) EIB bonds. The German Federal Parliament has authorized the approximately 4,000 Spezialfonds to invest up to 20% of their investments in cryptocurrencies , for an estimated amount of 240 billion euros.

If the maturation times of an initiative at the European level were long, the country would have to provide for it autonomously, if only to be ready to integrate into the EU institutions, when they come into force. Experiments represent the best training school for professionals capable of arriving at regulations in a subject which, due to its rapid evolution, requires continuous fine-tuning.

The legitimacy in various forms of the existence of "virtual savings" is now a reality that crosses with savings generated in the traditional way, ie without spending a portion of the income produced by work or capital. Among the problems that have arisen, the aggravation of persistent discrimination in tax treatment between the assets owned by Italian families must be considered, which alter their balance of portfolios, with repercussions on the proper functioning of the financial market and on real activity. A specific imbalance concerns the treatment of real estate assets, which are subject to unacceptable discrimination. It has been amply demonstrated that construction and public works play a central role in all processes of productive recovery and recovery of social stability, for which finance represents the indispensable fuel that feeds the engine of development. The solution to this problem must be considered an essential part of the reform policy undertaken in the context of the NRP.

Knowing to deliberate

Guido Carli repeated that those with public responsibilities must not limit themselves to raising problems, much less expressing fears, but have a duty to come up with solutions. Previously Luigi Einaudi had specified that one cannot deliberate without knowing. The analysis carried out so far has moved along these lines.

The examination of the problems raised by the widespread use of innovative techniques by the financial industry was set out in the body of the Discourse . We are faced with revolutionary changes that must be faced with full awareness of the contents and urgency of their solution in order to avoid negative consequences on the micro and macro systemic stability of the securities market and, in this way, on the savings and economic growth necessary to protect them and use them. We believe that a vast specific education campaign is necessary, even more incisive than the one implemented to improve the level of financial preparation of Italian citizens in which Consob and the main institutions of the country participated.

The situation in which the financial market currently operates highlights the inadequacy of the institutional architecture (regulations and entities) aimed at protecting savings and supporting income and employment growth. In the last Speech we proposed to launch an initiative to unify the regulatory provisions of the TUB and the TUF, as already suggested by Carlo Azeglio Ciampi after the 1993 banking reform, but the situation has become so complicated as to require a broader consideration and uniformity of all modes of functioning of the monetary and financial market at the domestic and international level.

An obligatory step is the reconfirmation that the legal validity of contracts is guaranteed only by their denomination in sovereign currency. If, as it would seem, it is intended to recognize the existence of private currencies, users must specify in a specific contractual clause that they are aware of the risks they take on by making use of non-public currencies and the market and savings supervisory authorities must to be able to know, with a special access key to decentralized accounting, all the operations of this type that are implemented.

Carrying out this task requires full knowledge of the innovative techniques that have established themselves on the global securities market. It would seem that the awareness that legislation cannot be established on a technologically neutral basis, that is, independent of the IT tools used and their continuous evolution.

To this end, it is necessary to activate formal consultation structures in Italy between government bodies and independent authorities that give a unitary direction to the decisions on the matter, also in view of the position to be taken with regard to the European and international initiatives in progress. A first step would be the implementation of the 2011 ESRB (European Committee for Systemic Risk) recommendation which would create a single national counterpart that takes on the responsibility of macro-prudential stability. The Bank of Italy would maintain a central role, justified by its participation in the Eurosystem around which European finance currently revolves, but close coordination between the three independent supervisory authorities (CONSOB, IVASS and COVIP) would be guaranteed, with the participation of the MEF.

Banks and financial intermediaries are engaging in the digitization of their current business and in establishing collaborations with technological platforms that manage encrypted instruments, often already operating abroad. The confluence between the two actions will depend on the choices that will be made on the regulatory level for cryptocurrencies and cryptoassets , but as of now we need to move within the framework of a broader strategy that avoids a technological dependence of our banking and financial system to protect Italian savings and remunerate them in line with the returns on invested capital.

To facilitate this process, groups of specialized professionals must be created within public institutions to collaborate with each other in order to reach the goal of adopting the new technologies applied to the payment and financial systems more quickly. The objective can be quickly achieved by co-opting the high-level researchers present in Italian universities and drawing on the reservoir of Italians operating abroad, resources that are waiting to be mobilized. Consob has moved in this direction, reaching collaboration agreements with Italian and foreign universities and drafting a memorandum of understanding with the Ministry of Scientific Research and the Conference of Rectors of Italian Universities to undertake initiatives with doctoral students engaged in subjects of common interest. . However, the financial resources and the rules governing the recruitment of the necessary professional skills must be adequate, taking into account the wider service that they would provide to the entire socio-economic system as a training center for new management groups and citizens aware of the tasks they await them.

The object of such collaborations would be the definition of the technical choices and the regulation of the various aspects of the use of virtual instruments and their interchange with traditional instruments. In particular, the definition of access methods (or keys) to decentralized blockchain / DLT accounting to guarantee the information necessary for market transparency, IT security, the legal validity of the content of the custody and exchange contracts of virtual instruments and credit and derivatives or other financial forms that are grafted into them, as well as their interaction with similar transactions carried out with traditional instruments.

Considering the pace at which the process of transformation of monetary and financial matters to be regulated and supervised occurs, the preliminary phase of the work carried out by numerous public institutions and private research centers can be said to be concluded and convergence of wills is required, overcoming fears and hesitations, towards an operational solution that does not suffer from too many compromises. By way of action, a more complete regulation will be provided, as has happened and continues to happen for the treatment of traditional instruments. The "warnings" addressed to investors on the risks they run by operating in cryptocurrency are no longer enough. The time for reflections is now over and we must move on to choices.

Practical experience is the best teacher for obtaining the necessary knowledge to decide how to deal with the problems that have arisen in recent years on the operation of the money and financial market in the infosphere.

A separate discussion must be made for the use of Artificial Intelligence techniques, which requires a continuous effort to verify the correspondence of the algorithms to the need widely felt by savers to entrust the management of credit and portfolios to objective, transparent and efficient choices. There are several opinions on the subject, often linked to a lack of knowledge of this highly sophisticated method of choice or to hesitations about the usefulness or ethics of substituting human intelligence for artificial intelligence, which is none other than enhanced human intelligence. The sublime minds of men and women will always be at the center of humanity's progress.

In the absence of an integrated vision of the problems and their governance, a chain of negative effects could be initiated due to a quantitative and qualitative imbalance between legal and private money that would trigger Gresham's Law, according to which bad money drives away the good. Some central banks have already warned of this possibility. If this happened, it would cause the collapse of the fiduciary regime on which the systemic stability of the securities market rests with effects on the real market. The graft could occur if the recent inflation fears that have arisen in some economies materialize and different growth rates between large geopolitical-economic areas are established in a prolonged measure, inducing the authorities to change the direction of economic policy, increasing the rates of interest and by reducing public spending, especially on the usual side of infrastructure investments, with negative effects on market expectations and related behavior. The chain would continue in the form of disturbances on exchange relations between currencies which, as economic history teaches, would interfere with international competition, the growth of world trade and geopolitical cooperation, not only on the economic side.

Despite the existence of this serious risk, the confidence in the possibility that governments and independent authorities can avoid such an outlet has not disappeared, but their action requires a full awareness of the ways to deal with it, working on citizens to reach a majority of consents. An educational campaign of equal intensity with respect to that carried out for health prevention or which is taking place today for environmental and social protection, which have become an integral part of the program of the new European Commission, would be even more necessary.

Consob has launched a vast internal training program at all levels since the early months of 2020, achieving a good awareness of the problem set out here and preparing to face the new reality of the markets. This awareness and the relative commitment have not yet produced the expected results due to the regulatory constraints that weigh down its capacity for implementation, which are no different from those encountered by other state organizations. The Government has moved in this direction for the public administration, also in line with the commitment envisaged by the PNRR, but the reform strategy must concern all the institutions.

In conclusion, the main message of the analysis carried out is that it is the expectations of progress, sometimes even of a utopian nature, that have moved and move the conquests of humanity. Their ability to affect the resistance that the existing shows depends on the achievement by the citizens of an awareness of the objectives and of the ways to achieve them. Therefore, there has been a great deal of insistence on a threefold educational and formative commitment as a viaticum of success for the choices to be made

Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.

⇒ Register now ⇐

The article The complete speech of the Consob President, Paolo Savona, at the Market comes from ScenariEconomici.it .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-discorso-completo-del-presidente-della-consob-paolo-savona-al-mercato/ on Mon, 14 Jun 2021 14:03:41 +0000.