A reflection on the new structure of the European financial system

6 May 2020

On May 4, Italy officially entered phase 2: in the spotlight, the restarting of production activities between the digitalization process within companies and the link with Europe.

We talked about it with Massimiliano Marzo, Associate Professor of Political Economics at the University of Bologna and Scientific Director of the Master in Wealth Management – ​​Heritage Management of BBS.

“Faced with such a heavy crisis, the question immediately arises of how to get out of it. Inevitably the discussion shifts to two questions: when to reopen companies and which ones? What strategy for Europe? In the first aspect, the strength will be represented from the digitization process, which is crucial in the current job market. This transformation will allow companies that have been equipped for this purpose to resume earlier, ensuring compliance with the safety standards for workers thanks to the methods provided by smart working.

On the second point, the debate of the last few weeks has split public opinion in two, placing, on one hand, strenuous supporters of Europe who believe that the use of the ESM (European Stability Mechanism) is right, on the other those who use this criticality to blow on the fire of anti-Europeanism.

About the ESM, it is necessary to consider two fundamental aspects, such as conditionality and the number of funds available. On the first point, it is up to the ability of the government of the individual state that requires access to the funds, having to demonstrate the ability to link this conditionality to the purpose for which it makes use of the fund itself. It follows that to reduce cross-compliance to a minimum, it would be sufficient to demonstrate that access to the funds is necessary to support the extraordinary healthcare costs due to the epidemic.

Despite this, however, there is a theme of quantity: the funds to which Italy can have access are not sufficient to face the health crisis and aid to businesses. For this reason, some defend the use of the issue of European bonds, a strategy that in turn opens up a further problem dictated by the timing: assuming that the green light is given to the issue of corona-bonds, when it will be possible to proceed? Not in a very tight time for sure. A third way seems to open up that provides for an agreement at European level such that every state gets into debt, and a European fund (which may be the same ESM) that buys the excess of bonds and finances this purchase by issuing its own time of a bond, whose guarantee is composite and is proportional to the size of the economy of each country compared to the total size of the European economy “.

This is an extremely complex scenario, which has highlighted how much this new economic and financial context requires the presence of experts capable of managing a constantly changing situation. The BBS Master aims to train financial consultants who know how to operate in the public and private sector.

Author: Massimiliano Marzo


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