The 2023 Bancor Prize to Larry Summers, former US Secretary of the Treasury

The 2023 Bancor Prize to Larry Summers, former US Secretary of the Treasury

Rome, October 24, 2023 – Professor Larry Summersformer US Secretary of the Treasury during the Clinton administration, director of the National Economic Committee with Obama and dean of Harvard University, received a medal Bancor Prizefounded in 2022 byThe Guido Carli Association is sponsored by Banca IfisTo reward distinguished figures in the economic and financial world. The award ceremony was held in Rome at the Doria Pamphilj Gallery and witnessed speeches by Federico Carli, President of the Guido Carli Association, and Ernesto Furstenberg Fascio, President of Banca Efes, in the presence of Ignazio Vesco, Governor of the Bank of Italy, and Paolo. Savona, President of Consob, and Pietro Cipollone, Member of the Governing Council of the European Central Bank. It was announced during the event that, starting in 2024, a new prize will be awarded to outstanding figures in international journalism who, through their work, have had a decisive influence on public debate. An award that aims to reward the values ​​of competence, integrity and transparency also in the journalistic field and which will be allocated by a jury composed of the most reliable names in the Italian journalistic scene.

Judicial reading

“I am incredibly honored and grateful to have been awarded the Bancor Prize – said Summers in an electronic communication during the judicial reading. I was very moved to learn that your jury decided to award the award to me, a year later, my dear friend Mervyn King (former bank governor) England) received this award last year. I am grateful for this recognition, but what is even more grateful is that all of us, who work in positions of public responsibility in the financial sphere, do not do this. To serve the interests of bankers, for the sake of bankers, nor to make the capital markets “It works best as an abstraction. We do it to create a better, more stable society based on greater interconnectedness and exchanges that are inevitably facilitated and developed with finance.” After the thanksgiving ritual, Summers reflected broadly on the global moment “where there are issues of enormous importance that can in some ways transcend funding challenges.” “For several years Before CovidHe pointed out that since the financial crisis, the concerns of macroeconomists have not been about hyperinflation, but about hyperinflation Inflation is not enough – A key question for monetary economists and monetary policy debates. It was the so-called “zero lower bound”, that is, the possibility of lowering interest rates below zero, given the implications for the banking system and the possibility of holding liquidity and the fear that, even at zero or in some way, negative interest rates, the economy would not be able to Generate sufficient investment demand to absorb all savings. This is the idea that has long troubled economists, economists who talk about “general surplus,” and economists who talk about underconsumption. This was a particularly pressing concern for the American economist Alvin Hanson, when he spoke of secular stagnation in the mid-to-late 1930s. Before the pandemic, I was among those who argued that problems had shifted dramatically from the supply side to the demand side, and that it was important to find a way to produce more stimulus. At the time I was quite skeptical – in fact, very skeptical – about using negative interest rates as a tool to produce more demand. My concern was that investment projects that were attractive at -1% interest rate but not at zero interest rate might not have been very good investment projects. My fear was that as coupon payments on loans fell or fell, markets would struggle to perform their basic function of ensuring that capital was allocated to those who would make the most of it. I feared that unusually low interest rates would lead to dangerous increases in leverage and create asset bubbles. That is why I thought it necessary to find other ways to stimulate demand, reduce all kinds of obstacles to structural investments, encourage public investments and, in some cases, strengthen social security or redistribution, so that resources are transferred to those who have less propensity to invest. Spending for those who are more inclined to spend. In hindsight, that was a relatively short period of secular stagnation. Since then, I think a lot of things have changed, some of them changed almost permanently. Why There is no permanent economic change. With the coronavirus, with the pandemic and the large pandemic emergency response programs, in particular, but not only, in the United States, we find ourselves today in a very different situation. The issues are more serious than they were before, a situation that, in light of the large deficit, interest rates They are able to move significantly away from the zero lower bound, economies can grow reasonably strongly, and in fact they can increase nominal demand quickly enough to put the 2% inflation target out of reach. This implies very different fiscal challenges and an equally different monetary policy environment. I believe that anyone who suggests that there is a hard and fast rule or simple formula that can guide future policy has not lived long enough to appreciate all the surprises and unknowns that may arise. I do not share the opinion To many, including some academic friends, Now is the time to abandon the 2% inflation target.And again: “In my opinion, it would probably require maintaining a level of demand consistent with price stability in the United States A long period of fairly high interest rates Compared to prevailing estimates of neutral interest rates. I do not envy today’s central bankers the challenges that lie ahead. Everyone will benefit if they can act not for short-term adequacy, nor to minimize knock-on effects and disruptions, but to maintain the broad sense of commitment to price stability that has been the fulcrum of all the economic successes of the past generation. I believe that fiscal policy issues should play a more important role in the coming years than in the past. I’m more worried about The financial position of the United States in the medium and long term than has been the case in the forty years that I have been involved in macroeconomic policy. Consider that the latest estimates issued by the Congressional Budget Office regarding the fiscal situation in the United States indicate a deficit of about 7.3%. . Financial and economic integration were important elements in this choice. The creation of the single market in Europe, which brought together countries that had fought wars with each other roughly every half century or even a millennium. Formation of sister institutions to Bretton Woods, The World Bank and the International Monetary FundA vision of a world in which countries can trade, share and prosper, and the vision that when one country prospers, other countries prosper as well. The result of this prosperity was a period of extraordinary success. Never has humanity seen this kind of progress in improving the lives of so many people with such little war, as has happened over the past seventy-eight years. A third, perhaps less dramatic, but equally important, inflection point occurred in 1989, withThe fall of the Berlin Wall. Since then we have seen amazing, extraordinary and positive things happen. No one can doubt that. In October 2023 I can say the story is over again. There is a wide range of forces that support order and civilization, and there are those that increasingly unite and oppose them. Therefore, the choices we all make, the institutions we form, the debts we incur or do not incur, and the ways in which we allocate or do not allocate resources, have never been more important. “So I am deeply grateful to all of you for this award, but even more grateful for what this institution does to promote careful and disciplined thinking about issues that could not be more profound and relevant.”

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Furstenberg Fasio (Chairman of Banca Ifis): “From 2024, the Bancor Prize for Journalists too”

“The Bancor Prize reaches its second year with further consolidation,” he announced Ernesto Furstenberg Facio, President of Banca Ifis, on the sidelines of the 2023 edition of the award. Created to help keep our country open to international economic debate and to promote continuous dialogue between different opinions and experiences, Bancor refers to an experiment carried out by two men of distinction: Governor Guido Carli and the great journalist Eugenio Scalfari, who created – under precisely this acronym – an unconventional experiment of confrontation between… Different forces and opinions, in the columns of the weekly magazine L’Espresso. Starting next year, as mentioned by my friend Federico Carli – whom I thank for the work done together to provide more and more content for this award – Bancor will expand with Another recognition reserved for prominent figures in international journalism who have distinguished themselves for their contribution to public debate. The current panel will be joined by a distinguished and prestigious jury of journalists. Federico Carli, Carli’s nephew, will be joined by Donata Scalfari, journalist and daughter of Eugenio Scalfari – in the tradition we have chosen for family continuity as a testament to the continuity of values.”

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