(Finance) – Reward excellent personalities in the economic-financial world by recognizing competence, integrity and transparency. This is the objective of Bancor Award, established in 2022 byGuido Carli Association with the sponsored by Banca Ifis. An award that was conferred today on Larry Summers – former secretary of the US Treasury during the Clinton administration, director of the National Economic Committee with Obama and rector of Harvard – which took place in Rome, at the Doria Pamphilj Gallery. They attended the awards ceremony Federico CarliPresident of the Guido Carli Association ed Ernesto Fürstenberg FassioPresident of Banca Ifis, in the presence of Ignazio ViscoGovernor of the Bank of Italy, Paolo SavonaPresident of Consob, e Pietro Cipollonemember of the ECB board.
During the event it was announced that, starting from 2024, a new recognition for leading figures in international journalism who, through their work, have had a decisive impact on the public debate. An award which aims to reward the values of competence, integrity and transparency also in the journalistic field and which will be assigned by a jury made up of the most authoritative names in the Italian journalistic panorama. “The Bancor Award arrives in its second year with further consolidation. Created to help keep our country open to international economic debate and to promote continuous dialogue between different opinions and experiences, Bancor – declared Fürstenberg Fassio, President of Banca Ifis – refers to an experiment carried out by two men of excellence: the Governor Guido Carli and a great journalist, Eugenio Scalfari, who created – precisely under this acronym – an unorthodox experience of confrontation between different powers and opinions, in the columns of the weekly L ‘Expressed. From next year, as recalled by my friend Federico Carli – whom I thank for the work done together to give more and more content to this Award – Bancor will expand with another recognition dedicated to leading figures of international journalism who have distinguished themselves for their contribution to the public debate. An authoritative and prestigious jury of journalists will join the current one. Federico Carli, Carli’s nephew, will be joined by Donata Scalfari, journalist and daughter of Eugenio Scalfari – in the tradition we have chosen of family continuity as testimony to the continuity of values. I would like to thank the Bank of Italy and Consob, in the persons of Governor Visco and President Savona, for the closeness shown to this Award since the first edition”.
Lectio magistralis by Lawrence Summers – “With the coronavirus, with the pandemic and the major pandemic emergency response programs, particularly, but not only, in the United States, we find ourselves in a situation today where the fiscal problems are much more serious than they once were, a situation in which, with large deficits, interest rates can move substantially away from the zero lower bound and economies can grow reasonably robustly and, indeed, can increase nominal demand rapidly enough to make the goal of a inflation at 2%”. This is what he said Larry Summers, in the lectio magistralis at the Bancor prize. “I do not share the opinion of many, including some academic friends, according to which this is the time to abandon the 2% inflation target. I myself – continued Summers – have had strong reservations about defining precise numerical objectives for inflation, but after these numerical targets have been set, after efforts have been made to reach them, after all the efforts made to achieve them, abandoning them simply because the task of reaching them seems difficult seems to me to be somewhat counterproductive in terms of credibility I believe that at this point what is appropriate is not a hard and fast rule, but political vigilance aimed at ensuring that the containment of inflationary expectations is a priority. It would be great to achieve a soft landing. My suspicion is that we will not succeed, neither in the United States nor in Europe, a bring inflation back to 2% or close to 2% in a lasting way without accepting a significant increase in the degree of economic slowdown. I would very much like to be wrong in this hypothesis of mine, given the substantial fiscal deterioration in the United States, and at the same time I cannot speak with equal certainty about Europe. In my view, maintaining a level of demand consistent with price stability in the United States will likely require an extended period of fairly high interest rates relative to prevailing estimates of neutral interest rates. I do not envy today’s central bankers the challenges that await them. It will benefit everyone if they can act not for short-term convenience, nor to minimize painful impacts and dislocation, but to maintain the broad sense of commitment to price stability that has been the fulcrum of all the economic successes of the last generation”. Summers recalled that the latest Congressional Budget Office estimates on the fiscal situation in the United States indicate a deficit of 7.3% about. “In ten years,” he added, “these calculations assume that the Treasury bond interest rate will be around 2%, which seems unlikely to me. These calculations assume that national defense spending as a percentage of GDP declines significantly, which seems unlikely to me. These calculations assume that all of the Trump tax cuts are repealed, which seems unlikely to me. These calculations assume that the recent revenue shortfalls do not extend into the future, which seems to me unlikely. These calculations assume that there will be no new funding for spending initiatives, which seems unlikely to me. If you take all these factors into account, you can expect a doubling of the deficit, a double-digit budget deficit that, at In my opinion, it is a far from attractive prospect for the richest and most prosperous economy in the world.” In this scenario – he explained Summers – “the interest rate consequences risk triggering a vicious cycle of higher rates, higher debts and even higher rates in the United States. It risks inhibiting capital formation globally, particularly the flow of capital from richer to developing countries. There is a risk of compromising financial stability and complexity, as maturity walls would need to be renewed at much higher interest rates, in both mortgage and leveraged lending markets For many countries, the challenge of political management would become more difficult. The fear is that there will be significant capital outflows in the face of excessively high US interest rates. There will be a minus and this is the most important aspect for any conversation about the budget and budget deficits. It’s a bit like borrowing to buy a car: it’s not an alternative to earning more or cutting other expenses for a family, but simply a way to distribute these costs over time, even if their total amount increases due to interest. The same goes for the government. Indebtedness it is not a way to finance spending. It is a way to postpone the financing of spending. It’s a way to postpone tax increases or to postpone other spending cuts, even if the overall size goes up. Therefore, whether it is about containing inflation in the short term or maintaining financial stability in the medium term or ensuring adequate levels of investment and growth in the long term or maintaining an efficient global system, I believe it is necessary to address the concerns relating to public debt in the United States. And if you allow me, thinking about Europe, nowhere else is this aspect more urgent than in Italy”.
The Bancor Prize – The Bancor Prize is inspired – in name and values - by the term “Bancor” used in 1944 by the economist John Maynard Keynes, on the occasion of the Bretton Woods agreements, when the main countries of the world were preparing to close the dramatic story of the war, trying to design a new structure of international relations that would avoid a repetition of the horrors that had characterized the first half of the 1940s 900. Bancor was the solution proposed by the economist: a supranational currency governed by the rationality of men to remove the development prospects of the entire community of Nations from the arbitrariness of a single hegemonic power. The proposal remained a currency utopia. The term Bancor was never used again until 30 May 1971 when it appeared for the first time in L’Espresso as enigmatic signature. A pseudonym that, in a short time, turned into an editorial success. Bancor’s interventions were awaited by economists, politicians and bankers with growing interest, reported by the foreign press, commented on at universities, debated during high international monetary meetings and even the subject of parliamentary questions. The debut article was titled “Storm Coming.” The object of the analysis was precisely the international monetary order from which the mysterious author had drawn inspiration to hide his identity. Bancor expressed judgments, assessments and forecasts on the crisis that the gold exchange standard was going through which ensured it a deserved fame: less than three months later, in fact, Nixon declared the inconvertibility of the dollar into gold and the system established 27 years earlier at Bretton Woods was crumbled. Several years after Bancor’s last posting, it was discovered that the authors of the articles were Guido Carli and Eugenio Scalfari. Finding the collection of Bancor articles in the archives, was born from Federico Carli, President of the Guido Carli Association, the idea of establishing the Bancor Award, to recover the spirit behind a word so rich in suggestions. In the wake marked by Bancor, the intent of the Prize is to give life to a reflection on the problems we are going through, from which a useful compass can be obtained for tracing a route that leads out of the labyrinth: each era presents its own difficulties, but History teaches that, by trusting in man’s rationality and ingenuity, it is always possible to find the way to overcome obstacles.