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LUISS Guido Carli


Course syllabus

European Banking Supervision: the role of the Bank of Italy

Professor Giuseppe Ferrero

The main functions of the Bank of Italy are designed to ensure monetary and financial stability, necessary conditions for a balanced economic growth. The bank contributes to the decisions on the single monetary policy of the euro area and performs the tasks entrusted to it as a national central bank in the Eurosystem. As the national supervisory authority, the Bank seeks to ensure the sound and prudent management of intermediaries, the overall stability of the financial system and compliance with the rules and regulations of those subject to supervision.

In this lesson, we will focus on the monetary policy framework before and during the Global Financial and the Sovereign debt crises. After briefly introducing the economic concepts that are necessary in order to understand the functioning of a monetary system, we will discuss about conventional and unconventional monetary policies in the Eurosystem, the interactions with financial regulation, and the institutional changes that have been implemented in recent years in order to improve stability and efficiency of the financial system.

Visit to the Bank of Italy

The Single Supervisory Mechanism
  •  SSM: the financial crisis, the project of the banking Union, state of play
  •  General features and organization of the SSM
  •  Decision-making process
  •  Off-site and on-site supervision
  •  The SSM activities: from the 2014 Comprehensive Assessment up to now
  •  The oversight on less significant institutions
  •  The role of Banca d’Italia
  •  Work in progress
  •  Open discussion: opportunities and room for improvement
The Single Resolution Mechanism
  • Second Pillar of the Banking Union
  • Main drivers
  • Institutional and legal framework (a quick overview of the SRM regulation and BRR Directive)
The Role of Banca d'Italia in the SRM 
  • What we do: resolution planning, resolution managing, normal insolvency proceedings, resolution fund related activities, horizontal activities (policy, technical support, etc.)
  • How we work: the Resolution Unit Organization, the interaction within the SRM (IRTs, SRB Sessions, SRB Committees, EU COM, BCE, MEF)
Anti-Money Laundering and Countering the Financing of Terrorism
  •  Overview on the Italian AML/CFT legislation and system
  •  The Financial Intelligence Unit: tasks and organization
  •  The financial analysis of the Suspicious Transaction Reports (STRs): databases available, tools and methodology, output
  •  Dissemination of STRs and cooperation with domestic authorities
  •  International activities: exchange of information with other FIUs and engagement with international organizations
  •  Bank of Italy AML/CTF risk-based supervision: on and off-site tools and methodologies
  •  Bank of Italy AML/CTF contribution to International forum
Monetary Policy
The Design of Operational Framework 

The session discusses the choices a central bank needs to tackle in the implementation of monetary policy at an operational level. Examples include: refinancing through outright vs. repo operations, selection of a narrow vs. wide pool of counterparties, implicit vs explicit definition of the corridor, optimal width of the corridor itself. 

The Eurosystem’s Asset Purchase Program 

The session introduces the main objectives of the expanded asset purchase program (APP).  It then addresses topics such as the governance of the program within the Eurosystem, the concept of market neutrality and some specific issues relating to the individual program (covered bonds, asset-backed securities, public and corporate sector securities).

The Eurosystem’s Collateral Framework

 The session first addresses some overarching issues in the design of the Eurosystem’s collateral framework. It then tackles the valuation of the assets and the related risk management measures. Finally, the session discusses the choices undertaken by the Eurosystem regarding this framework throughout the crisis and the response of the banking system.

Financial Market Supervision: Consob

In this lesson, we will consider the role of the Italian Authority for securities regulation and supervision (Consob) to ensure transparency and fair behaviors in financial markets.  We will analyze the rationale of the development of a specific set of rules for securities markets and for the establishment of a specialized supervisory authority.  We will consider the evolution of Consob’s role and the progressive extension of its areas of activity to new phenomena, like the corporate governance of listed companies, also in the context of the European Union increasing integration of rules and supervisory practices where Consob is involved mainly through its participation to the European Securities Market Authority (ESMA).  We will see the tools box for carrying out Consob’s supervisory and enforcement powers on financial intermediaries, listed companies and securities markets managers and the main challenges raised by the recent markets’ evolution.  

European Policies and Instruments to Improve SME Access to Finance

Professor Armando Melone

The lesson will focus on European policies and instruments to improve SMEs' access to finance. After briefly introducing the current situation which SMEs are facing, in particular, related to their financing needs, we will discuss the tools that the European Commission has put forward to tackle those issues. In particular, the lesson will concentrate on the objectives and mechanics of various financial instruments available for SMEs, namely the European Fund for Strategic Investments (EFSI), COSME and Horizon 2020, implemented by the European Investment Bank group. More specifically, details will be provided on venture capital and loan guarantee instruments. Furthermore, the lesson will provide an overview of Commission policies to support SMEs’ access to alternative sources of finance (e.g. venture capital, crowdfunding, business angels, securitisation, stock listing, Fintech), in the context of the Capital Markets Union initiative. Finally, the lesson will provide an overview of European legislation on financial services with an impact on SMEs’ access to finance.

The European Investment Bank: an Introduction

Professor Franco Passacantando

This lesson provides a description of the main features of the European Investment Bank. The origin and the rationale of the EIB will be explained from a historical point of view. In this respect, the role of the Bank will be discussed in comparison with that of the World Bank and other Multilateral Development Banks. The final part of the lesson will focus on the policy directions for the EIB during the recent financial and migration crises.

Visit to European Investment Bank

During the visit to the EIB Rome Office, the students will meet EIB experts from various professional backgrounds and will learn more about the role and activities of the European Investment Bank (EIB) Group (including the European Investment Fund). The EIB experts will drive the students through the EIB project cycle that leads to the decision as to whether an investment operation will be ultimately financed by the Bank and through the different financing products offered by the EIB. The students will also learn about the implementation of the Investment Plan for Europe and its important financial component, the European Fund for Strategic Investments (EFSI) that it is being implemented by the EIB Group. The EIB experts will explain the EFSI set up and governance, products available and key areas of investment, with a view to the bundling of EU-funded advisory services (JASPERS, EPEC, etc.) within a European Investment Advisory Hub, also coordinated by EIB. Landmark EFSI operations financed by the EIB (including in Italy) will, finally, be analyzed and presented to the students.

Introduction by Professor Passacantando

Lectures from EIB team

  • Role and activities of the European Investment Bank (EIB) Group
  • The EIB project cycle
  • The different financing products offered by the EIB Group
  • The Investment Plan for Europe and the European Fund for Strategic Investments (EFSI) including EU-funded advisory services (JASPERS, EPEC, etc.) and the European Investment Advisory Hub
  • Landmark EFSI operations financed by the EIB (including in Italy)