1

Thisnewsletterisatwice-yearlypublicationintendedtoinformreadersregularly

aboutinternationaltechnicalcooperationattheBankofItaly,especiallyseminars

andworkshops.

TheBankof Italy isengaged in technicalcooperationactivities(i.e. seminars

andworkshops,bilateralstafftrainingandinstitutionbuilding)tostrengthen

theinstitutionalcapabilitiesofthebene iciaries.Thebene iciary institutionsare

generallyinnewEUmemberstatesthathavenotyetadoptedtheeuro,EUcandi-

dateandpotentialcandidatecountries,Mediterraneancountries,EasternEurope-

an and Caucasian countries within the European Neighbourhood Policy area,

BRICSandotheremergingcountries.

The areas of cooperation relate to theBank’s institutional functions (central

banking including market operations, payment systems and treasury ser-

vices, economic research and statistics, banking and inancial supervision, and

currencycirculation)andsomesupportactivities(IT,internalauditing,controls).

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

cooperazione-tecnica-internazionale/index.html

2016 (1st Semester) Highlights 1

Seminars&Workshops 2

2016 Forthcoming Seminars 3

2016 Forthcoming Workshops 4

General Information 5

Contacts 5 Co

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Highlights

NUMBER 6

JULY 2016

2016 (1st Semester)

TheBankofItaly’strainingactivitieshavebeenfurtherexpandedin2016,by

providing4seminarsand4workshops,halfofwhichwereheld in thefirst

partoftheyear.Ouractivitiesalsoincluded12bilateralactivities(studyvisitsor

meetings in Rome andmissions abroad) involving 106 external participants in

total,fromalmostallthecontinents.MostofthemcamefromEUcandidateand

potential candidate countries (WesternBalkans andTurkey, 23%), followedby

NorthAfricaandtheMiddleEast(19%),G20countries(18%,Turkeynotinclud-

ed),non-euroareaEUMemberStates(15%),CIS(13%,Russianotincluded),Sub

-SaharanAfrica(8%),andothers.Activitiesfocusedmainlyonhumanresources

managementandcentralbankorganizationalmatters;economicresearch,statis-

tics,andbankingsupervisionplayedalsoanimportantrole.

Detailsconcerningseminarsandworkshopsofthefirstsemesterof2016arein-

side.

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Workshop on ‘Building the Backbone of the

Organisation: Internal Rules, Processes

and Procedures’

(Rome, 10-11 March 2016)

Participants:21

The irst workshop on Organization and Hu-

man Resources (HR)organizedbytheBankof

Italy(BoI)aimedatdiscussinghowtoshapea

centralbankasamodernand lexibleorgani-

zation.Thespiritoftheeventwasnottogivea

one-size itsallrecipebuttoprovideageneral

frameworkandavarietyof solutions. In line

withBrandonMull’s quotationbyoneof the

participants – ‘smart people learn from their

own mistakes. However, the real sharp ones

learn from themistakeof others’ - thework-

shopaimedatfavouringdebateamongpartici-

pants so that insights could bedrawn froma

varietyofexperiences. [Readmoreonpage6]

Seminar on ‘Internal Audit in a Central Bank’

(Rome, 6-8 April 2016)

Participants:28

Internal auditing has been deeply and quickly

evolvingovertherecentyears.Itsdevelopment

hasbeensignificantbothintermsoftheprofes-

sionasawholeandintermsoftheroleofinter-

nalauditorsincentralbanks.Centralbanksare

increasingly facingnewchallenges,duetoboth

the recent financial crisis and a more dynamic

environment.Insomecontexts,suchastheEu-

ropean Systemof CentralBanks, a newwayof

cooperating among central banks is arising in

theinternalAuditfieldalso.

[Readmoreonpage7]

Workshop on ‘Euro Banknote Production

with a Focus on Design and Origination: The

Experience of the Bank of Italy’

(Rome, 26-27 May 2016)

Participants:10

Despitethedevelopmentinrecentyearsofdif-

ferent payment instruments, banknotes and

cash in general still play an important role in

makingtransactions.Thepublic’sconfidencein

cash is essential to safeguard the smooth func-

tioning of the payment system and it basically

relies on the integrity of thenotes, in termsof

both authenticity and quality. To this end, not

only are a resilient supply of banknotes and a

constant control of their quality in circulation

necessarybutalsoaproperDesignandOrigina-

tion (D&O): this phasedefines the note layout,

itssecurityfeaturesandtherelatedproduction

processesaswell,andaffectsthenotes’perfor-

mance/integrity significantly throughout their

lifecycle.[Readmoreonpage9]

Seminar on ‘Financial Risk Management for

Central Banks: Implementing a Comprehen-

sive Framework to Deal with Institutional

and Investment Challenges’

(Rome, 15 -17 June 2016)

Participants:20

During the current crisis, the topic of financial

risk management for central banks has gained

momentum, as well as the awareness of the

needtoidentify,measureandhandlerisks.

Financialriskpermeatesallfunctionsofcentral

banks:monetarypolicyaswellasmanagingdif-

ferent investment portfolios (foreign reserves

and domestic currency assets). Even though

central banks are not subject to liquidity con-

straints,becauseof theirability tocreatemon-

ey, and are not subject to bankruptcy proce-

dures, financial losses may undermine central

banks’credibilityandreputation.

[Readmoreonpage10]

Seminars & Workshops

‘Smart people learn from their own mistakes. However, the real sharp

oneslearnfromthemistakeofothers’

BrandonMull

(Americanwriter)

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Seminar on ‘Regulatory and Supervisory Issues of Small

Banking and Financial Entities, with Special Focus on

SME and Household Financing’

(Rome, 14-16 September 2016)

The seminar provides a comprehensive overview of the

mainandmostcommonregulatoryandsupervisoryaspects

ofSMEandhousehold inancing,withspecialfocusona)the

scopeofregulationandsupervision:themaintypesofinter-

mediaries involved in SME/household inancing (small

banks, mutual funds and non-bank intermediaries), licens-

ing, activities, instruments, and shadow-banking issues; b)

prudential regulation and supervision, especially the appli-

cation of Basel requirements concerning SME and retail i-

nancing; c) supervisory approaches and tools used with

small banks and inancial intermediaries; d) macropruden-

tial issues;ande)transparencyrequirementsandcustomer

protection.

Seminar on ‘Payment Systems and Market Infrastruc-

tures in the EU; Policy, Operation, Oversight: the Bank of

Italy’s Experience’

(Rome, 14-16 December 2016)

Theseminaraimstoimproveparticipants’knowledgeofEU

paymentsystemsandmarket infrastructures fromapolicy,

operational, technical and oversight point of

view.ConsideringtheroleplayedbytheEuropeanSystemof

Central Banks (ESCB) in this ield, the seminarwill look at

the services offered in large-value payment systems, TAR-

GET2,andinthesecuritiesclearingandsettlementsystems,

TARGET2-Securities(T2S),aswellastheoversightfunctions

performedbytheBankofItalyanditsinvolvementinretail

payment services and instruments within the Single Euro

PaymentsArea(SEPA).Presentationswillbesupplemented

withavisit to theServiceDeskof theTARGET2-T2SSingle

Shared Platform (SSP), the Eurosystem’s Financial Market

Infrastructure jointlyoperatedby theBankof Italyand the

DeutscheBundesbank.

2016 Forthcoming Seminars

The2017seminarand

workshop catalogue

willbepublishedsoon

on the Bank of Italy

website

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Workshop on ‘ Financial Statistics in Central Banks’

(Rome, 13-14 October 2016)

Therecent inancialcrisisandresponsestoithaveraisedthe

analyticalinterestofsoundandreliableinformationonsector

balancesheetsand transactions, the interconnectednessof i-

nancialsystemsandthenationaleconomy’s inancialexposure

with the restof theworld. Statisticiansandnational account-

antsarecalledupon toprovidesuitableand timelystatistical

datatosupportpolicydecisions.Against thisbackground, the

workshopaimsatdescribingthelatestdevelopmentsinmeth-

odsandscopeof inancialstatisticsproducedbycentralbanks.

TopicswillincludeanoverviewonthecurrentItalianFinancial

AccountsframeworkaspartoftheEurosystem,withafocuson

sources,methodsandusesof inancialaccountsdevelopedby

theBankofItaly.TheBankofItalyITplatformfor inancialsta-

tisticswillalsobeillustrated.Speci icattentionwillbedevoted

to the interrelationbetween inancialaccountsandothersta-

tistics,includingBalanceofPayments.

Workshop on ‘Anti-Money Laundering ‘

(Rome, 17-18 November 2016)

Theworkshoponanti-money-launderingwillprovideanover-

viewoftheactionstakenbytheBankofItalytopreventsuper-

visedentitiesfrombeingusedforcriminalpurposes.Following

ageneralpresentationofthesupervisoryactivitiesforthepre-

ventionofcriminalactivities, theworkshopwill focusonItal-

ian legislation on anti-money-laundering and counter-

terrorism- inancing (AML/CTF), describing the competencies

ofthedifferentauthoritiesinvolved.AdescriptionoftheBank

ofItaly’srisk-basedsupervisorymodelonAMLwillbeprovid-

ed,andcasestudieswillbepresented.Theworkshopwillalso

includeanoverviewof theanti-money-launderingregimefol-

lowing the introduction of the new payment methods. The

workshopwillfeatureacontributionfromtheItalianFinancial

Intelligence Unit (FIU), which will illustrate its activities and

theresultsofitsanalysisofsuspicioustransactionreports.

2016 Forthcoming Workshops

Workshopsareorganizedasshortseminarswithanarrowthematicfocus,addressedtosmallgroupsofspecialists.

The2017seminarand

workshop catalogue

willbepublishedsoon

on the Bank of Italy

website

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Participationinseminarsandworkshopsis

byinvitation.

Requests from institutions other than the

regular bene iciaries are considered on a

case-by-casebasis.

TheworkinglanguageisEnglish.

Participationisfreeofcharge.

Insomecaseshotelaccommodationispro-

videdbytheBankofItaly.

Travelexpenses toand fromRomearenot

reimbursed.

Seminar duration is usually 3 days; work-

shopslast2daysatthemost.

Lunchesarecoveredforthedurationofthe

seminar/workshop. A courtesy dinner is

alsooffered.

Weusually acceptup to25participants in

the seminars and only one representative

fromeachinstitutions.Asfarasworkshops

are concerned, groups are not larger than

15participants.

Our seminars andworkshops are as inter-

active as possible. Short presentations by

selectedparticipants areusually invited in

ordertostimulatediscussionanddebate.

General Information

Contacts

InternationalTechnicalCooperationandEUNeighbourhoodEconomiesDivision

InternationalRelationsDirectorate

DirectorateGeneralforEconomics,StatisticsandResearch

BankofItaly

ViaNazionale,91

00184Roma

Italy

https://www.bancaditalia.it

Tel.+390647921

Fax+390647922681

E-mail:

bdi.cooperation@bancaditalia.itTheBankofItaly’snewconferencecenter

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(Workshop on ‘Building the Backbone of the

Organisation: Internal Rules, Processes and

Procedures’, continued from page 2) The un-

derlyingconceptualframeworkwasMcKinsey’s

7S model according to which interdependent

factorsofanorganizationneedto

be aligned for it to be successful

(PetersandWaterman,2004)1.

Many questions were raised and

various possible answers were

discussed. The participants’ var-

ied backgrounds testified to the

number of issues at stake and

how interwovenall thevariables

are.BoIspeakersdrewfromtheir

experienceofthemanyorganiza-

tionalchangesinthefieldsofor-

ganization,HRandICT.Theworkshopalsoben-

efited fromaspeechonHR issuesgivenbythe

CzechRepublic’sCentralBankparticipant.

The first day focused on the ‘hard’ variables

starting from the structure. How do we draw

the boundaries of units? How big or small

shouldunitsbe?Howshouldresponsibilitiesbe

assigned and coordination promoted? Despite

differences in functionsand size, centralbanks

show a common evolution in the direction of

higher levels of specialization, internal and ex-

ternal coordination, decentralization and dele-

gation.

BoI is currently investing in a process-driven

view to increase cross-functional coordination,

offer a better understanding of the operations

performed, pay attention to outcomes and im-

pactsonfinalstakeholders.

The floor was opened to a com-

parison between coordination

mechanisms and the rules sys-

tem. How do we tailor an effi-

cient internal system of rules?

Should rules be binding or flexi-

ble?Detailedorprinciplebased?

Once again one size does not fit

all but it all depends on the or-

ganization and the type of pro-

cesstheyareruling.Nevertheless

thereare commonbetter regula-

tion policies thathelp todrawupandmaintain

rules. How to go from better regulation to

housekeeping and responsivenesswas also de-

bated.

The role of technology, the methodologies to

analyse and re-engineer processes as well as

examples of dematerialization benefiting from

the widespread use of digital signatures were

highlighted and discussed. The ‘simplification

box’,anapplicationthroughwhichstaffcanpost

theirideasforstreamliningprocesses,stimulat-

eddebate:awaytocompensateforbadcommu-

Seminars & Workshops (...continued)

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WorkshoponBuildingtheBackboneoftheOrganisation-Workingingroup

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nicationoranempowermenttool?

Participantswereledintoavirtualworldofreal

timemeetingsandcommunication. InBoI tele-

conferences,alsowithexternalusers,arewithin

everyone’s reach by means of their personal

devices.

The experiences and the pros and cons of

adopting Enterprise Resource Planning (ERP)

solutionswereshared.TheuseofERPsystems

has been at the base of a ‘management dash-

board’withtrustedinformationanddataonre-

sources, activities andoutputs presented in an

easy-to-readway.

Acasestudyontheorganizationoftheprocure-

ment function taken from real BoI experience

challenged the participants by giving them the

opportunity to play with key variables of the

organization.

Movingontohumancapital,theseconddaywas

devotedtoskills,staffandstyleandtheroleof

HRmanagementandculturetokeep(ormake)

theorganizationsimple.

IntheCzechNationalBank,HRhasbeenrecent-

ly involved in supporting the vast number of

organizational reforms across the bank, rein-

forcing corporate culture as well as defining

newtrainingandrewardingsystems.

In theBankof Italy there is currently anenor-

mouschangeunderway in themanagementof

humanresources.

A new, flexible time management framework

allowsemployees to customize their timetable.

Teleworkingarousedgreatinterestandalotof

informationwassharedonhowitworks.

Areformofthemanagerialsectorhasjustbeen

launched.Thenewsystemreducesthenumber

of hierarchical levels, introduces vacancies for

managerial positions and a performance man-

agement system based on work by objectives.

Participantswere very curious about the feed-

back system between line managers and em-

ployeesandhowtoimplementitinaneffective

way.

The impressive cultural change under way

stressesthecrucialroleofmanagers,calledup-

ontopromotenewworkingpractices-planning

work,extendingdelegation,managingbyobjec-

tives-tosupportabetterwork-lifebalance,re-

ward collaborators as well as sustain their in-

volvementandgeartheorganizationtowardsa

results-based approach. Managers need to be

consistently supported in strengthening skills

such as human resources management, con-

structive relations with stakeholders and their

attitude to innovation. What is BoI doing to

meet this challenge?The systemofmanagerial

trainingmakesinnovativetrainingtoolsperma-

nentlyavailableandpromotesamanagerialcul-

ture.

In the end…it was a shame to say goodbye! It

wasan‘arrivederci’though:inlightofthemany

challenges that central banks face nowadays,

the role of support functions in empowering

institutional functions and contributing to or-

ganizationalwellbeingbecomescrucial.To this

end, we need to be on the cutting edge of

knowledgeandimmerseourselvesinourpeers'

experiences, intertwining organizational varia-

bles as well as people to get added value and

takeupthechallenges!

1 T. Peters and Robert H. Waterman Jr., In search of excellence, 2004, HarperCollins, HarperBusiness Essentials series.

________________

(Seminar on ‘Internal Audit in a Central Bank’,

continuedfrompage2) Nowadays,internalau-

ditors required to be primary players in this

context,protectingthevaluesandreputationof

an organization as well as supporting the

achievement of its goals. To this end, internal

auditing should play a new role in a central

bank’s governance, aiming at improving inter-

nal control and risk management systems by

disseminatingriskcultureandpromotinginno-

vation.

The seminar offered a representation of how

this role has been interpreted by the Internal

Audit Directorate (IAD) at the Bank of Italy.

Over thespanofa fewyears, the IADbasically

did a small revolution: all the methodologies

havebeenupdated,AuditCharterhasbeenreis-

sued, new audit procedures have been put in

place and the processes have been re-

engineered.

Bank of Italy’s speakers shared what roles the

IADplayedat thedifferentstagesofsuch jour-

neyandwhich lessonshavebeen learnedwith

the participants. Furthermore, the various

Theviewsexpressedduringtheseminarsandworkshopsdonotnecessarilyre+lectthepositionoftheBankofItaly

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points of view, offered by participants coming

from many different backgrounds, contributed

enormously to animating an already lively de-

bate. The long journey that led the IAD to

change its role from a more compliance-

oriented function to a modern and risk-based

Internal Audit function, triggered a discussion

about what role fits better in a changing envi-

ronment for internal auditors. The debatewas

alsoenrichedbythecomparisonwiththeexpe-

rience of the Central Bank of the Republic of

TurkeyandtheBankofThailand.

Threerolesfortheinternalauditorswerehigh-

lighted during the seminar. First role: internal

auditors as promoters of a risk-culture for the

organization both in terms of risk awareness

and of cultural adaptation to changes such as

thedigitalrevolutionandthe Internet.The im-

pactof these changeshasbeen significant, and

so are the related risks, first and foremost the

risk of cyber-frauds and cyber-attacks, for ex-

ample. The IAD at the Bank of Italy bases its

methodologies and techniques on risks. This

makestheinternalauditactivitymoreeffective

andefficientbypursuinganoptimalalignment

withorganizational strategies. In thisway, IAD

is able to provide value-for-money services to

the organization, whilst also improving risk

awarenesswithintheBank.

The second role relates to innovative ability

which in our view is another key feature of a

moderninternalauditdepartment.TheIAD,af-

terhavingfacilitatedtheintroductionofanop-

erationalriskmanagementframeworkandpoli-

cyintheBank,startedtopromotetheadoption

of the three linesofdefencemodel.This isbe-

cause,intheIAD’sopinion,abetterclarification

ofrolesandresponsibilitiesinriskmanagement

is crucial in order to effectively and efficiently

pursuetheBank’sgoals.Inthisvein,theBankof

Italy’s IAD, as the main assurance provider on

internal control and risk management systems

withintheBank,isanidealfacilitatorintheor-

ganization, inorder to foster abroaderaware-

nessofthetopicandtomapandpromotecoor-

dination among the various assurance provid-

ers. Toachievethis,theBankofItaly’sIADas-

sistsingatheringasmuchinformationaspossi-

ble to eventually combine the different assur-

ancesandtousethemtobuildanoverallopin-

ionontheinternalcontrolsystemandriskman-

agement. The latter will help the decision-

making bodies inmaking informed and strate-

gic decisions. In our view, it will be one more

value-addedproductthattheIADisabletopro-

videtotheBank.

At this point in time, having built sound pro-

cessesandmethodologies,andbeenrecognized

as a point of reference within the Bank, the

BankofItaly’sIADisstrivingtobecomeastra-

tegicadvisorforBoardandSeniorManagement

on the hot topics for the Bank (third role). To

thisend,webelieveittobecrucialforaninter-

nalauditfunctiontoacton iveelements:com-

Theviewsexpressedduringtheseminarsandworkshopsdonotnecessarilyre+lectthepositionoftheBankofItaly

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munication and inclusiveness, a rigorous pro-

fessional approach, awareness of its abilities,

innovativeabilityandenhancingtheperception

oftheinternalauditanditsvaluefortheorgani-

zation. A sound combination of these drivers

mustbemaintainedover timeso that the IAD

can successfully face new challenges and add

moreandincreasingvaluetotheBank.

________________

(Workshop on ‘Euro Banknote Production

with a Focus on Design and Origination: The

Experience of the Bank of Italy’, continued

frompage 2) TheBank of Italy’s (BoI)Bank-

notes Directorate is a full ‘in-house’ Printing

Works(PW)whosemissionis,ontheonehand,

to produce the quota of euro banknotes as-

signedyearlytoBoIbytheECBand,ontheoth-

erhand,supportingtheEurosystemindevelop-

ing new denominations by carrying out both

R&DandD&Oactivities.TheBoI’sPWcancount

onagreatdealofexperienceinthisfield,up-to-

datemachinery,askilledworkforceandrecog-

nized expertise. This has made it possible for

theBoI’sPWtoplayamajorrolewithintheEu-

ro Second Series project (ES2) from the very

beginning, tohavebeenappointedas theMain

R&D Test Print Centre of the euro area since

2012 and, as such, to now be in charge of the

D&OofneweuroHighDenominations.

The workshop was therefore aimed at provid-

ing a focus on themain issues of D&O activity

within the framework of euro banknotes pro-

duction.

An overview of the reference scenario and of

Eurosystem working principles was provided,

outlining the organization of euro banknotes

production (decentralized scenario with pool-

ing), the ECB and the national central

banks’(NCBs)rolesandthesetofrequirements

to comply with (security, quality, environment

and health and safety). The background infor-

mation was integrated with the description of

theBoIBanknotesDirectorate’smainresources

andactivities(organizationalset-up,machinery

andequipmentandworkforce)andofthemain

manufacturing steps (printing stages, cutting

and finishing),also toprepare foravisit to the

plant.These topics aroused considerable inter-

estamong theattendees,whoraisedquestions

on the allocation of euro banknote production

amongNCBs,ontheforecastsofeurobanknote

requirements and their fluctuations, on the re-

centdecisiontostopissuingthe€500noteand

soforth.Amajorcontributiontothediscussion

camefromtherepresentativeoftheBancoCen-

traldoBrasil,whopresentedtheBrazilianexpe-

rience in dealingwith the issuance of the new

seriesofReal,revealinganumberofsimilarities

with the Eurosystem approach in series re-

placement.

Theworkshop thengot straight to theheartof

thematterandfocusedontheBoI’sD&Ofacili-

ties and know-how, with a comprehensive de-

scription of the underlying processes and a

sound explanation of key achievements and

challengesinthefield;anoverviewoftheBoI’s

contribution to theES2projectwasalsogiven.

Theproductionofoffsetand intaglioplatesus-

ingthemostadvanced‘computer-to-plate’tech-

niques was illustrated, highlighting the transi-

tion from ‘analogue’ to ‘digital’ technology; the

BoI’sPWadoptedsuchasystemasaforerunner

inearly2000s,thusassumingleadershipatthe

Eurosystem level. Innovative pre-press activi-

ties were outlined, with specific reference to

PhysicalVapourDeposition(PVD),asmarttech-

nologyforcoatingintaglioplates.Developedas

aBoI-ECBjointproject, inpartnershipwiththe

‘Politecnico di Milano’, a renowned scientific

Theviewsexpressedduringtheseminarsandworkshopsdonotnecessarilyre+lectthepositionoftheBankofItaly

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Universitybased inMilan,and the Italiancom-

pany‘ProtecSurfaceTechnologies’,amongother

benefits this technique replaced the chromium

galvanic bath, a traditional process that was

quiteriskyintermsofhealthandsafety.

Someofthemostsuccessfulcommunicationini-

tiatives on euro banknotes were also shared

with the participants, namely the e-book on

banknoteproductionandtheinteractiveexhibi-

tion ‘Theideasbehindthebanknote:creativity,

technology and security’. Finally, the competi-

tion for schools ‘Let’s design a banknote’ was

illustrated: it fallswithin the scopeof financial

education initiatives and is organized every

year by theBoI and theMinistry of Education,

withthecooperationoftheMinistryforForeign

Affairs(specificinformationcanbefoundonthe

BoI’swebsite).

________________

(Seminar on ‘Financial Risk Management for

Central Banks: Implementing a Comprehen-

sive Framework to Deal with Institutional

and Investment Challenges’, continued from

page2) Theseminarwasaimedatsharingstate

-of-the-artknowledgeaboutfinancialriskman-

agementandtopresent two importantanalyti-

cal tools recentlydevelopedby theBoIhas: (i)

the integrated risk management framework

based on an asset and liabilities management

approach(ALM)and(ii)theIn-houseCreditAs-

sessment System (ICAS) for the assessment of

theriskinessofcreditclaimsacceptedascollat-

eralformonetarypolicyoperations.

The integrated risk management framework

aims to identify an investment portfolio that

maximizeswealth inadverseevents.Theseare

contingencieswherecentralbankscouldbere-

quired to take on additional risks because of

theirinstitutionalfunctions.Inotherwords,the

framework assesses optimal portfolio manage-

ment,givingprioritytopolicyobjectivesandto

theunavoidablerisksthereof.

The seminar focused specific attention onhow

todevelopan integratedviewofrisksover the

wholespectrumofactivities, therebyovercom-

ing the traditional approach of segregating

monetary policy and investment assets from a

risk management perspective. The illustrated

framework includes both explicit and implicit

items,mainlyseigniorageandcontingentliabili-

ties related to financial stability. The latter en-

tails support to illiquid but solvent banks or

other functions specific to a single jurisdiction,

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11

which were extensively discussed in the Q&A

sessions.

Implicit items expose central banks to non-

alienablerisk-returnfactors.Toprovidepartici-

pantswithpracticaltipsonhowtoincorporate

suchitemsinariskanalysis,partoftheseminar

wasdedicated to themainoperational tool for

StrategicAssetAllocation (SAA): a comprehen-

sive representation or risk-adjusted balance

sheet (RABS).Byexplicitly recognizing implicit

andexplicit assets and liabilities, theRABSen-

compassestheinterdependencebetweendiffer-

ent sources of risks, originating from invest-

mentportfoliosandpolicyfunctions.Thus, it is

a fundamental tool formaking investments, as

faraspossible,asourceoffinancialstrengthof

the central bank, especially under adverse ex-

ternalconditions.

Onthissubject,theCentralBankofBrazilmade

a valuable presentation concerning its experi-

ence with SAA for international reserves and

theeffortsmadetointroduceanintegratedALM

approach, which goes beyond the boundary of

thecentralbanktoencompasspublicaswellas

private foreign liabilities. Participants agreed

abouttheimportanceofawell-definedstrategy

inriskmanagementtoensuretransparencyand

accountability in the management of public

funds.

Thesecondpartof the seminar focusedon the

ICAS,whichisasystemusedtoassesstheriski-

ness of credit claims pledged by Italian banks

formonetarypolicypurposes,enablingthemto

expandavailablecollateralandenhancetheim-

plementation of monetary policy since July

2013.The ICAS is also an important sourceof

informationnotonlyfortheFinancialRiskMan-

agement Directorate but also for the central

bank as a whole, as a tool for monitoring the

developmentoftheItalianrealeconomy,there-

byfosteringsynergieswiththeFinancialStabil-

ityDirectorate.TheICAShasbeendevelopedby

leveragingtheexperienceofseveralBankofIta-

lyDirectoratesGeneral (MarketsandPayment

Systems, Financial Supervision and Regulation

and Economics, Statistics and Research). How

ICASfunctionswasillustratedduringthesemi-

nar:itenvisagesapreliminarystatisticalassess-

ment (ICAS Stat) followed by a qualitative as-

sessmentbyfinancialanalysts(ExpertSystem).

An interesting presentation by the Bulgarian

CentralBank stressed the importanceof finan-

cialprotectionensuredbybuildingupasystem

ofquantitativelimitsandrulesconcerningissu-

ers,assetclassesandconcentration.TheCentral

Bank of Ukraine’s constructive presentation

showed the new Ukrainian integrated credit

risk assessment framework where the role of

creditexpertsisessential.

Participantsshowedgreatinterestinthetopics

and shared their national experiences, provid-

ingvaluableinsights.Thespontaneousandcol-

laborativeexchangesofviewsamongdelegates

andspeakerscontributedtotheeffectivenessof

theseminarand laiddown the foundations for

furthercollaboration.

Theviewsexpressedduringtheseminarsandworkshopsdonotnecessarilyre+lectthepositionoftheBankofItaly

BBCDEFIGBHI-ICGJKCBGLECBHGJMNCLMBHMEEOJKBGLECCJPQHJGGJK

DirectorateGeneralforEconomics,StatisticsandResearch

ViaNazionale,91

00184Roma—Italia

Tel.+390647921

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

www.bancaditalia.it

This issue was prepared by:

MiriamDiBattista,GiuseppeGrue,RanieroLevantesi,ValerioLolini,FabioLupo,AdrianaSelvag-

gi,ElenaTiranti.