## _cr0679

## Source details

**Canonical URL:** [_cr0679](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0679.pdf)

## Other formats

- [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0679.pdf.md)
- [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0679.pdf.json)

---

### General
- Assessment scope: observance by the Banca d’Italia (BI) of the IMF’s Code of Good Practices on Transparency in Monetary and Financial Policies (MFPT Code) for banking supervision, carried out as part of the IMF Financial Sector Assessment Program (FSAP).
- Evidence base: pre-mission work; review of relevant laws, regulations, and policies; documentation from the BI Web site and official BI publications; discussions with the BI and market participants.
- Mission timing and staff: The mission took place in July 2005; the assessment was carried out by Marie Thérèse Camilleri Gilson (IMF).
- Note on subsequent legal change: the assessment does not integrate changes as a function of the adoption of the Savings Law on December 28, 2005, except as noted in relevant footnotes.

### Institutional and market structure overview
- Legal and institutional framework:
  - 1993 Banking Law (legislative Decree 385 of September 1993) defines broad objectives: “the sound and prudent management of supervised institutions, as well as the overall stability, efficiency and competitiveness of the financial system.”
  - Consolidated Law on Financial Intermediation (Legislative Decree 58, of 24 February 1998) defines institutional framework and relationship between financial agencies (BI and Consob).
  - BI organization and responsibilities also regulated in the BI bylaws (ratified by Royal Decree no. 1067/1936 as subsequently amended).
- BI responsibilities:
  - Power of authorization; functions of supervision based on prudential returns, inspection and regulation; issuance of regulations, instructions and specific measures.
  - Prudential supervision of nonbank financial intermediaries, Italian securities firms (società di intermediazione mobiliare, or SIMs) and asset management companies (including investment funds and SICAV).
  - Shared supervision with Consob for institutions providing investment services under the Consolidated Law on Financial Intermediation (Article 5).
  - Italian Foreign Exchange Office (Ufficio Italiano dei Cambi, or UIC) chaired by the BI Governor; checks compliance with anti-money-laundering legislation pursuant to Law 197/1991 and keeps the register of minor nonbank financial intermediaries.
- Transparency and governance practices:
  - BI has established a structured and comprehensive public information system for timely dissemination of data and information on policy developments and regulatory changes.
  - Internal governance arrangements, publication of audited financial statements, and statutory provisions governing conflict of interest and staff conduct provide assurances of integrity.
- Identified transparency enhancement opportunities:
  - More specific explanations of the broad objectives (stability, efficiency and competitiveness) and open discussion of potential tradeoffs.
  - More extensive public discussion of progress achieved toward these objectives to complement accountability (e.g., through regular reporting on banking supervision activities, senior officials’ speeches, Governor’s testimony to Parliamentary committees).
  - Disclosure of practical modalities for cooperation and the type of information exchanged among authorities would enhance transparency.

### Practice-by-practice assessment (methodology)
- Assessment scale: observed; broadly observed; partly observed; not observed; not applicable.
- Basis: qualitative assessment grounded in existing laws, regulations and practices.

### V. Clarity of roles, responsibilities and objectives of financial agencies responsible for financial policies (practices 5.1–5.2)
- 5.1 Observations:
  - Broad objectives and institutional framework defined in the 1993 Banking Law and the Consolidated Law on Financial Intermediation.
  - Assessment: Observed.
- 5.1.1 The broad objective(s) publicly disclosed and explained:
  - Channels of disclosure: monthly supervisory bulletin (Bollettino di Vigilanza); publication in the Gazzetta Ufficiale della Repubblica Italiana; Governor’s Annual Report; periodic BI statistical bulletin and supplements.
  - Assessment: Broadly observed.
  - Recommendation: objectives in the Banking Law could be further elaborated and disclosed in a more readily accessible document to explain relative priorities, linkages and potential tradeoffs.
  - Footnote: Subsequent to the assessment, the Savings Law of December 28, 2006 transferred responsibility for regulating anti-competition behavior to the Anti-trust Authority, while BI and the Anti-trust Authority were given shared responsibility for banks’ mergers and acquisitions.
- 5.1.2 Responsibilities and authority publicly disclosed:
  - Description: BI’s powers include authorization, prudential supervision, inspection and regulatory powers.
  - Assessment: Observed.
- 5.1.3 Modalities of accountability publicly disclosed:
  - Legal basis: Article 4 (3) of the Banking Law requiring prior public notice of supervisory principles and methods and publication of an annual report; reporting to Parliament; applicability of Article 97 of the Italian Constitution and Law 241/1990 on Transparency and public rights of access to administrative documents.
  - Assessment: Observed.
- 5.1.4 Procedures for appointment, terms and removal publicly disclosed:
  - Procedures and criteria in BI Statute (R.D. 11 June 1936, n. 1067; updated versions available on BI Web site).
  - Key provisions:
    - Board of Directors: thirteen members elected by General Meetings; term of five years; Board may dismiss Governor by two-thirds resolution.
    - Appointments and dismissals must be approved by a decree of the President of the Republic acting on a proposal from the President of the Council of Ministers in agreement with the Minister of the Treasury after consulting the Council of Ministers.
    - Qualification and incompatibility provisions (Articles 59 and 60).
  - Noted lack of clarity:
    - BI Statute gives the Governor a mandate for an unlimited period of time; ECB interpreted “indefinite” as “in excess of five years,” concluding BI Statute is in line with ESCB requirements.
    - BI Statute does not specify criteria for removal of the Governor and members of governing bodies; Article 14 of the ESCB Statute addresses removal.
    - No provisions in BI Statute relating to dismissal criteria for Director General and Deputy Directors General; BI indicated safeguards against arbitrary dismissal set out in case law.
  - Assessment: Broadly observed.
  - Recommendation: publicly disclose a reference explaining (i) the ECB opinion of the conformity of the BI Statute with Article 14.2 of the ESCB Statute and (ii) general criteria for removal of heads and members of governing bodies.
  - Follow-up: BI amended the on-line pamphlet “le persone e l’organizzazione.” The recently adopted Savings Law now explicitly mentions Article 14.2 of the ESCB Statutes for the Governor’s dismissal procedures.
- 5.2 Relationships between financial agencies:
  - Relationship between BI and Consob defined in the Consolidated Law on Financial Intermediation and publicly disclosed via the Gazzetta Ufficiale and the Web sites of the two authorities.
  - Article 7 of the Banking Law requires cooperation and exchange of information; authorities may not invoke professional secrecy in mutual relations.
  - Assessment: Observed.

### 5.3 Payment systems oversight
- 5.3 and sub-practices:
  - BI does not have payment systems oversight responsibilities relevant for banking supervision.
  - Assessment for 5.3 and sub-practices: Not applicable.

### VI. Open process for formulating and reporting of financial policies — summary of BI practices
- 6.1 Legal mandates for transparency:
  - Article 4 (2) of the Banking Law requires prior public notice of supervisory principles/methods and publication of an annual report on supervisory activity.
  - Article 8 (1) of the Consolidated Law requires the monthly supervisory bulletin containing general measures and significant decisions, published within two months.
  - Article 97 of the Italian Constitution and Law 241/1990 apply to BI.
  - Assessment for 6.1: Broadly observed.
  - Comment: Little public disclosure of details on protocols defining practical modalities of cooperation and actual procedures for information sharing apart from notification of a new MOU in the Annual Report.
- 6.1.1 Regulatory framework and operating procedures:
  - BI publishes a collection of relevant legal sources in banking supervision and posts them on its Web site.
  - Internal Regulation no.177 of 1993 and two sets of regulations dated 16 May 1994 on public access to administrative documentation exist.
  - Supervisory instructions are printed, distributed to supervised entities, and available on the BI Web site; preambles reference legal bases and explain principles and objectives.
  - Assessment: Observed.
- 6.1.2 Financial reporting regulations:
  - Article 51 requires banks to send periodic reports and financial statements as established by the BI; Article 61 provides for consolidated supervision and reporting by holding companies.
  - BI establishes procedures via manuals published and posted on the BI Web site.
  - Assessment: Observed.
- 6.1.5 Formal procedures for information sharing and consultation:
  - Cooperation with Consob and other authorities; Article 10 requires notification of inspections and allows requests for on-site visits.
  - Special protocols signed with Consob and Isvap; understanding with UIC on anti–money-laundering supervision.
  - Information-sharing agreements contained in bilateral memoranda of understanding which are not publicly disclosed; BI Annual Report comments on parties and dates.
  - Assessment: Partly observed.
  - Recommendation: Disclose practical modalities beyond notification of date/parties to an MOU. Follow-up: MOU governing cooperation and exchange of information between BI and Consob was made public on the Web site of the two institutions.

### 6.2–6.4 Announcements, reporting, and consultations
- 6.2 Significant changes in financial policies:
  - BI publishes monthly supervisory bulletin and Gazzetta Ufficiale notices; announces regulatory changes via press releases and direct communications; presumption for consultation.
  - Assessment: Observed.
- 6.3 Periodic public reports on pursuit of policy objectives:
  - Annual Report explains modalities for pursuing objectives; monthly supervisory bulletin discusses new developments; speeches and parliamentary testimony supplement reporting.
  - Assessment: Observed.
- 6.4 Presumption in favor of public consultations:
  - No legal obligation but common practice to consult market on major regulatory changes via associations or external experts; examples include consultations on credit derivatives (December 2004–March 2005) and Basel 2 national discretion consultation.
  - Assessment: Observed.

### VII. Public availability of information on financial policies — reporting and statistics
- 7.1 Periodic public reports:
  - Main reports: monthly supervisory bulletin and Annual Report; supplemented by periodic statistical bulletins. All reports available on the BI Web site.
  - Assessment: Observed.
- 7.2 Public reporting of aggregate data:
  - BI maintains extensive databases and disseminates through Annual Report, Economic Bulletin, Statistical Bulletin (quarterly with a monthly supplement) and BIP on-line application.
  - Article 8 (3) of the Banking Law imposes statutory obligation to disclose statistics on supervised entities.
  - BI provides aggregate statistics to supervised intermediaries and may prepare ad hoc, fee-paying statistics subject to confidentiality.
  - BI collaborates with ECB pursuant to Article 5 of the ESCB Statute and satisfies SISTAN under Legislative Decree 322/1989; sends statistics to IMF, BIS and OECD.
  - Assessment: Observed.
- 7.3 BI balance sheet and aggregate market transactions:
  - BI balance sheet published in the Annual Report contains income statement, notes, information on subsidiaries, report of board of auditors and external auditors.
  - Monthly financial statement sent to the Ministry of Economy and Finance is published monthly in the BI Statistical Bulletin.
  - Assessment: Observed.
- 7.3.1 Aggregate disclosure of emergency financial support:
  - ELA: none requested since establishment of the ESCB institutional framework in 1999; past instances (early 1990s) disclosed in Annual Report.
  - Presumption toward aggregate ex-post disclosure if BI acts as lender of last resort in future crises.
  - Assessment: Observed.

### 7.4 Financial agencies should establish and maintain public information services
- Public information system:
  - BI disseminates banking supervision rules, statistics and data, economic bulletins and papers, legal publications, the Annual Report, regional economic reports, speeches of senior officials, and texts of key Parliamentary testimony.
  - Press releases prepared by the Communication and Press Relations Division; all information published on the Web site.
  - Communication and Press Relations Division maintains daily contact with media; press conferences organized at end of international meetings.
  - Assessment: Observed.
- Publications program (7.4.1):
  - Includes supervisory bulletin, research and statistical publications, speeches, nontechnical descriptions and information about ESCB activities.
  - Annual Report required by law; issued five months after the end of the relevant reporting period.
  - Access to publications is free of charge.
  - Assessment: Observed.
- Senior officials' communications (7.4.2):
  - Senior officials regularly explain objectives and performance via speeches and media interviews; texts are released publicly via official bulletin, media or Web site.
  - Testimonies before Parliament generally by Governor, Director General and Deputies; testimonies disclosed by Parliament in printed form and via its Web site.
  - Assessment: Observed.
- Availability of regulations and directives (7.5):
  - Text of general measures posted on the BI Web site upon adoption and published in the Gazzetta Ufficiale; BI issues a compendium of relevant regulations.
  - Assessment: Observed.
- Deposit insurance and client asset protection (7.6):
  - Two schemes: Interbank Deposit Guarantee Fund (Fondo Interbancario di Tutela dei Depositi - FITD) and Mutual Bank Depositors Guarantee Fund (Fondo di Garanzia dei Depositanti del Credito Cooperativo).
  - Reimbursement capped at € 103,291 per depositor.
  - Funding is ex-post and contributions are proportional to insured deposits; FITD adjusts contributions according to risk profile.
  - Membership compulsory for Italian branches of non-EU banks unless equivalent protection applies; EU bank branches may “top-up.”
  - Schemes and Banking Law/by-laws publicly disclosed; banks must inform customers about membership and coverage.
  - Assessment: Observed.
- Consumer protection and dispute settlement (7.7):
  - BI does not oversee consumer protection but requires banks to disclose complaints processes and dispute settlement arrangements.
  - Main nonjudicial mechanisms include the “Ombudsman office” (ABI) and “Settlement commissions” (Legislative Decree n. 5 of 17 January 2003).
  - Assessment: Not applicable.

### Accountability and assurances of integrity (VIII; 8.1–8.4)
- Parliamentary reporting and appearances (8.1):
  - BI reports in parliamentary hearings and at ICCS meetings when Parliament needs technical advice; no pre-specified schedule.
  - Assessment: Observed.
- Audited financial statements (8.2 and 8.2.1):
  - BI publicly discloses audited financial statements in the Annual Report no later than five months following the end of its financial year.
  - Article 27 (1) of the ESCB Statute: accounts audited by external auditors recommended by the Governing Council of the ECB and approved by the European Council; external auditor’s mandate is three years, renewable.
  - Assessment: Observed.
- Internal governance and internal audit disclosure (8.2.2):
  - BI Statute discloses conflicts of interest rules and staff conduct; pamphlet “le persone e l’organizzazione” discloses Internal Inspectorate and auditing activity reported in the Annual Report.
  - Observations:
    - Policy formulation and implementation responsibilities vested solely in the Governor (or delegated).
    - Board responsible for management and administration; supervised entities may own BI share capital; potential fragmentation of legal basis and unclear current shareholding composition since privatization.
  - Assessment: Observed.
- Operating expenses and revenues disclosure (8.3):
  - Financial statements include information on operating expenses and revenues.
  - Assessment: Observed.
- Standards for conduct of personal financial affairs and conflicts of interest (8.4):
  - General rules summarized on BI Web site; detailed staff regulation deposited with CNEL and available upon request.
  - Key provisions: employees must notify BI of any interests that could generate conflicts; prohibitions on leveraging BI knowledge, other employment, and securities transactions.
  - Disciplinary body “Commissione di disciplina” proposes sanctions including censure, reduction in salary, suspension (6 months to 1 year) and dismissal.
  - No specific provision offering legal protection to BI and its employees against legal action arising from performance of their functions.
  - Assessment (8.4): Observed.

### Recommended action plan (excerpt)
- V. Clarity of Roles, Responsibilities and Objectives
  - 5.1.1: Publicly disclose and explain the objectives of stability, efficiency and competitiveness.
  - 5.1.4: Publicly disclose the applicability of Article 14.2 of the ESCB Statute as regards dismissal of the Governor and the general criteria for removal of heads and members of governing bodies in the absence of such provisions in the BI Statute.
    - Follow-up: BI amended the on-line pamphlet “le persone e l’organizzazione.” The recently adopted Savings Law now explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures.
- VI. Open Process for Formulating and Reporting Financial Policies
  - 6.1.5: Publicly disclose details on protocols that define practical modalities of cooperation between domestic financial agencies and actual procedures followed for information sharing.
    - Follow-up: The MOU governing cooperation and exchange of information between BI and Consob was made public on the Web site of the two institutions.

### Recognition of compliance with MFPT Code
- Assessment recognizes a "very high degree of compliance" of the Italian banking supervisory system with the IMF MFPT Code.
- Positive features highlighted:
  - Extensive public information on banking supervision: Annual Report (about. 100 pages in length on supervisory activities), publication of general measures in the Gazzetta Ufficiale and Bollettino di vigilanza, detailed statistical program, frequent Parliamentary hearings, and speeches.
  - BI cooperation with domestic and foreign financial agencies through exchange of information and coordinated action; Memorandums of Understanding with Consob and ISVAP available on both authorities’ Web sites.
  - Practice of public consultation with market participants on significant regulatory changes.
- Appointment and dismissal safeguards:
  - Savings Law: Article 19.8 of the Savings Law established new procedures referring to Article 14.2 of the ESCB/ECB Statute; dismissal decisions may be referred to the Court of Justice by the Governor or by the Governing Council of the ECB on grounds of infringement of the Treaty or related rules.
  - BI Statute provides appointment/dismissal for Director General and two Deputy Directors General; principles and criteria for dismissal specified in general administrative law and case law.
  - EMI and ECB Convergence Reports and ECB opinion imply ESCB/ECB safeguards against arbitrary dismissal apply to Director General and Deputy Directors General performing ESCB-related tasks.
- Responsibilities for policy formulation and implementation:
  - Savings Law has attributed responsibilities for policy formulation and implementation to the whole Directorate.
- Reporting enhancements:
  - The Savings Law now provides for half-yearly reporting to both Parliament and Government.
  - BI is studying the possibility of a new report on evolution of the Italian banking and financial system and issues relevant to its regulatory and supervisory mandate.

_Source: _cr0679 - 7.4 Financial agencies should establish and maintain public information services._

### 1.    Practice-by-Practice Assessment of Observance of IMF’s MFP Transparency

### 1.    Practice-by-Practice Assessment of Observance of IMF’s MFP Transparency Code

### General
- Assessment scope: observance by the Banca d’Italia (BI) of the IMF’s Code of Good Practices on Transparency in Monetary and Financial Policies (MFPT Code) for banking supervision, carried out as part of the IMF Financial Sector Assessment Program (FSAP).
- Evidence base: pre-mission work; review of relevant laws, regulations, and policies; documentation from the BI Web site and official BI publications; discussions with the BI and market participants.
- Mission timing and staff: The mission took place in July 2005; the assessment was carried out by Marie Thérèse Camilleri Gilson (IMF).
- Note on subsequent legal change: the assessment does not integrate changes as a function of the adoption of the Savings Law on December 28, 2005, except as noted in relevant footnotes.

### Institutional and market structure overview
- Legal and institutional framework:
  - 1993 Banking Law (legislative Decree 385 of September 1993) defines broad objectives: “the sound and prudent management of supervised institutions, as well as the overall stability, efficiency and competitiveness of the financial system.”
  - Consolidated Law on Financial Intermediation (Legislative Decree 58, of 24 February 1998) defines institutional framework and relationship between financial agencies (BI and Consob).
  - BI organization and responsibilities also regulated in the BI bylaws (ratified by Royal Decree no. 1067/1936 as subsequently amended).
- BI responsibilities:
  - Power of authorization; functions of supervision based on prudential returns, inspection and regulation; issuance of regulations, instructions and specific measures.
  - Prudential supervision of nonbank financial intermediaries, Italian securities firms (società di intermediazione mobiliare, or SIMs) and asset management companies (including investment funds and SICAV).
  - Shared supervision with Consob for institutions providing investment services under the Consolidated Law on Financial Intermediation (Article 5).
  - Italian Foreign Exchange Office (Ufficio Italiano dei Cambi, or UIC) chaired by the BI Governor; checks compliance with anti-money-laundering legislation pursuant to Law 197/1991 and keeps the register of minor nonbank financial intermediaries.
- Transparency and governance practices:
  - BI has established a structured and comprehensive public information system for timely dissemination of data and information on policy developments and regulatory changes.
  - Internal governance arrangements, publication of audited financial statements, and statutory provisions governing conflict of interest and staff conduct provide assurances of integrity.
- Identified transparency enhancement opportunities:
  - More specific explanations of the broad objectives (stability, efficiency and competitiveness) and open discussion of potential tradeoffs.
  - More extensive public discussion of progress achieved toward these objectives to complement accountability (e.g., through regular reporting on banking supervision activities, senior officials’ speeches, Governor’s testimony to Parliamentary committees).
  - Disclosure of practical modalities for cooperation and the type of information exchanged among authorities would enhance transparency.

### Practice-by-practice assessment (methodology)
- Assessment scale: observed; broadly observed; partly observed; not observed; not applicable.
- Basis: qualitative assessment grounded in existing laws, regulations and practices.

### V. Clarity of roles, responsibilities and objectives of financial agencies responsible for financial policies (practices 5.1–5.2)

- 5.1 The broad objective(s) and institutional framework of financial agencies should be clearly defined, preferably in relevant legislation or regulation.
  - Description:
    - Broad objectives and institutional framework defined in the 1993 Banking Law and the Consolidated Law on Financial Intermediation.
    - Banking Law (Article 5) states objectives: “the sound and prudent management of the institutions subject to supervision, the overall stability, efficiency and competitiveness of the financial system and compliance with the provisions concerning credit.”
    - BI’s organization, jurisdiction and responsibilities set out in the BI bylaws (Royal Decree no. 1067/1936 as subsequently amended).
  - Assessment: Observed
  - 5.1.1 The broad objective(s) of financial agencies should be publicly disclosed and explained.
    - Description:
      - The 1993 Banking Law establishes objectives; some explanation appears in the second paragraph of p.285 in the 1993 BI Annual Report (stating that bank supervision targets stability, efficiency and competitiveness—with brief definitions).
      - Laws published in the Gazzetta Ufficiale della Repubblica Italiana; legal texts available on the BI Web site.
      - Channels for disclosing/explaining objectives:
        - monthly supervisory bulletin (Bollettino di Vigilanza) containing general measures and significant decisions (Article 8 (1) of the Banking Law and Article 3 (3) of the Consolidated Law on Financial Intermediation);
        - general provisions published in the Gazzetta Ufficiale della Repubblica Italiana where scope extends beyond supervised institutions;
        - Governor presents the Annual Report at the general shareholders’ meeting, containing a section on supervisory activities and criteria/methods of supervision (fulfils Article 4 (4) Banking Law requirement);
        - periodic BI statistical bulletin and supplements with reports on main Italian credit and financial aggregates.
      - Annual Report and BI bulletins are available on the BI Web site; senior BI representatives explain supervisory criteria/results to Parliament and the public via speeches and press releases.
    - Assessment: Broadly observed
    - Comments:
      - Recommendation: objectives in the Banking Law could be further elaborated and disclosed in a document more readily accessible than Annual Report archives to explain relative priorities, linkages and potential tradeoffs on an ongoing basis.
      - Footnote: Subsequent to the assessment, the Savings Law of December 28, 2006 transferred responsibility for regulating anti-competition behavior to the Anti-trust Authority, while BI and the Anti-trust Authority were given shared responsibility for banks’ mergers and acquisitions.
  - 5.1.2 The responsibilities of the financial agencies and the authority to conduct financial policies should be publicly disclosed.
    - Description: BI responsibility for banking supervision and its authority to conduct financial policies stem from the legal bases described above; BI’s powers include authorization, prudential supervision, inspection and regulatory powers.
    - Assessment: Observed
  - 5.1.3 The broad modalities of accountability for financial agencies should be publicly disclosed.
    - Description:
      - Article 4 (3) of the Banking Law: BI must establish and give prior public notice of principles and methods of its supervisory activity and publish an annual report on supervisory activity.
      - Accountability via regular reporting to Parliament (see also practice 8.1).
      - BI subject to Article 97 of the Italian Constitution and Law 241/1990 on Transparency and public rights of access to administrative documents; Article 4 (3) confirms applicability of such provisions to BI (with compatibility caveat) and allows the Governor to adopt general administrative measures regarding public access to administrative documents (see also 6.1.1).
    - Assessment: Observed
  - 5.1.4 Procedures for appointment, terms of office, and general criteria for removal of heads and members of governing bodies should be publicly disclosed.
    - Description:
      - Procedures and criteria laid down in the BI Statute (R.D. 11 June 1936, n. 1067; updated versions available on BI Web site).
      - Article 5: powers vested in General Meeting of Shareholders; Board of Directors and Board Committee; Directorate (Governor, Director General and two Deputy Directors General). Only the Governor is entrusted with policy formulation/implementation in banking supervision. Board Committee advisory role.
      - Appointment procedures:
        - Article 17: thirteen members of the Board of Directors are elected by General Meetings of Shareholders at main branches; one director per main branch; term of five years; may be re-elected. A meeting of the Board may be called by the senior Director to appoint and dismiss the Governor (Article 19).
        - Board appoints four directors to form Board Committee together with Governor (Article 18).
        - Governor may call Board Meeting to appoint and dismiss members of the Directorate.
        - Article 19: “appointments and dismissals must be approved by a decree of the President of the Republic acting on a proposal from the President of the Council of Ministers in agreement with the Minister of the Treasury after consulting the Council of Ministers.”
      - Qualification and incompatibility provisions (Articles 59 and 60): Governor, members of Board and Directorate may not hold political office, be members of any bank, engage in commerce, operate in the stock exchange, or hold positions of responsibility in any company except where authorized by the Board and only in recognized interests of the Bank.
      - Dismissal procedures:
        - Board of Directors can dismiss the Governor, Director General and two Deputy Directors General by a resolution of two thirds of its members (under chairmanship of senior Director for dismissal of the Governor).
      - Noted lack of clarity:
        - BI Statute gives the Governor a mandate for an unlimited period of time, whereas Article 14 of the ESCB Statute requires that “the term of office of a Governor of a national central bank shall be no less than five years.” ECB interpreted “indefinite” as “in excess of five years,” concluding BI Statute is in line with ESCB requirements.
        - BI Statute does not specify criteria for removal of the Governor and members of governing bodies; Article 14 of the ESCB Statute stipulates removal only if conditions for performance no longer met or guilty of serious misconduct.
        - 1998 EMI Convergence Report references direct applicability of the Treaty for criteria on dismissing the Governor in absence of national provisions.
        - No provisions in BI Statute relating to dismissal criteria for Director General and Deputy Directors General; BI indicated safeguards against arbitrary dismissal set out in case law (members removable only on grounds of nonfulfillment of goals).
    - Assessment: Broadly observed
    - Comments:
      - Recommendation: publicly disclose a reference clearly explaining (i) the ECB opinion of the conformity of the BI Statute with Article 14.2 of the ESCB Statute regarding the Governor, and (ii) general criteria for removal of heads and members of governing bodies to achieve full observance.
      - Note: “Further to this recommendation, BI has amended the on-line pamphlet entitled ‘le persone e l’organizzazione.’ The recently adopted Savings Law now explicitly mentions Article 14.2 of the ESCB Statutes for the Governor’s dismissal procedures.”
- 5.2 The relationship between financial agencies should be publicly disclosed.
  - Description:
    - Relationship between BI and Consob defined in the Consolidated Law on Financial Intermediation and publicly disclosed via the Gazzetta Ufficiale della Repubblica Italiana and the Web sites of the two authorities.
    - Cooperation regulated by the Banking Law:
      - Article 7: BI, Consob, the pension fund supervisory authority (Commissione di vigilanza sui fondi pensioni), the insurance supervisor (ISVAP) and the Italian foreign exchange office (Ufficio Italiano Cambi) shall cooperate by exchanging information; authorities may not invoke professional secrecy in mutual relations.
      - Article 7 (8) and (9): BI may exchange information with (a) administrative and judicial authorities in connection with liquidation or insolvency proceedings in Italy or abroad involving authorized persons; (b) bodies responsible for administration of compensation systems.
  - Assessment: Observed

*Source: IMF assessment document titled "TRANSPARENCY OF BANKING SUPERVISION" (practice-by-practice assessment and recommended action plan excerpts).*

### 5.3 The role of oversight agencies with regard to payment systems should be publicly disclosed.

### 5.3 The role of oversight agencies with regard to payment systems should be publicly disclosed.

### Payment systems oversight and self-regulation
- 5.3: Description — Not relevant for banking supervision. Assessment — Not applicable.
- 5.3.1: Agencies overseeing the payment system should promote timely public disclosure of general policy principles (including risk management policies) that affect the robustness of systemically important payment systems.
  - Description — Not relevant for banking supervision. Assessment — Not applicable.
- 5.4: Where financial agencies have oversight responsibilities for self-regulatory organizations (e.g., payment systems), the relationship between them should be publicly disclosed.
  - Description — The BI does not have oversight responsibilities for self-regulatory organizations engaged in banking supervision. Assessment — Not applicable.
- 5.5: Where self-regulatory organizations are authorized to perform part of the regulatory and supervisory process, they should be guided by the same good transparency practices specified for financial agencies.
  - Description — No self-regulatory organizations are authorized to perform part of the regulatory and supervisory process. Assessment — Not applicable.

### VI. Open process for formulating and reporting of financial policies — summary of BI practices
- 6.1: Transparency in conduct of bank supervision is legally mandated:
  - Article 4 (2) of the Banking Law requires the BI to give prior public notice of the principles and methods of supervisory activity it establishes and to publish an annual report on its supervisory activity. The annual report includes an extensive chapter on developments in the regulation and structure of the Italian banking and financial system, the risks, profitability and capital adequacy of intermediaries, and inspections carried out in the course of supervisory activity.
  - Article 8 (1) of the Consolidated Law on banking requires the BI to publish a monthly supervisory bulletin containing the general measures adopted by the credit authorities and other significant decisions related to supervision; these are published within two months of being adopted. The bulletin is available on the BI Web site.
  - Article 97 of the Italian Constitution and Law 241/1990 on Transparency and the public rights of access to administrative documents apply to the BI.
  - The BI publishes reports in conjunction with parliamentary hearings and other occasions.
- Assessment for 6.1 — Broadly observed.
- Comment for 6.1 — Little public disclosure of the details on protocols that define practical modalities of cooperation between domestic financial agencies and the actual procedures they follow for information sharing apart from notification of a new MOU in the Annual Report. (See also 6.1.5.)

### 6.1.1–6.1.5: Specific disclosure practices and limitations
- 6.1.1 Regulatory framework and operating procedures:
  - Description — BI publishes a collection of relevant legal sources in banking supervision (laws, implementing measures adopted by the ICCS, BI, and by the Minister of Economy, relevant communications to the system) and posts them on its Web site.
  - Article 4 (3) of the Banking Law requires the BI to indicate reasons for decisions and to publish measures for general application. BI issued Internal Regulation no.177 of 1993 and two sets of regulations dated 16 May 1994 on public access to administrative documentation. Supervisory instructions are printed, distributed to supervised entities, and available on the BI Web site; preambles reference legal bases and explain principles and objectives.
  - Assessment — Observed.
- 6.1.2 Financial reporting regulations:
  - Description — Article 51 requires banks to send periodic reports and financial statements in the manner and within the time limits established by the BI. Article 61 provides for consolidated supervision; holding companies must transmit consolidated reports and data including sub-consolidated data and information on companies with equity interest of at least 20 per cent.
  - The BI establishes procedures via manuals published and posted on the BI Web site that set out required data and methods for calculating each aggregate.
  - Assessment — Observed.
- 6.1.3 Regulations for organized financial markets — Description — Not relevant for banking supervision. Assessment — Not applicable.
- 6.1.4 Fees disclosure — Description — The BI does not charge any fees for banking supervision. Assessment — Not applicable.
- 6.1.5 Formal procedures for information sharing and consultation:
  - Description — Consolidated Law on Financial Intermediation and the Banking Law require the BI to cooperate with domestic and foreign supervisory authorities through formal and informal contacts, coordinated action, and exchange of information. Cooperation with Consob is emphasized; supervisory authorities may not invoke professional secrecy in mutual relations. Article 10 requires BI and Consob to notify each other of inspections and allows requests for on-site visits.
  - Special protocols signed with Consob and Isvap for mutual cooperation in periodic high-level meetings; understanding with UIC on supervision for anti–money-laundering purposes.
  - BI cooperates and exchanges information with EU authorities and counterparts in other countries. Any information received may not be transmitted to other Italian authorities or third parties without consent of the providing authority. Cooperation for consolidated supervision of cross-border banking groups is possible with supervisory authorities of other EU member states.
  - Information-sharing agreements are contained in bilateral memoranda of understanding which are not publicly disclosed; the BI Annual Report comments on the party to the agreement and the date of their conclusion.
  - Assessment — Partly observed.
  - Comment — Disclosure policy could be broadened to include practical modalities beyond public notification of date of, and parties to, an MOU. MOUs between the BI and other domestic financial agencies should be disclosed for full observation. Subsequent to this assessment, the MOU governing cooperation and exchange of information between BI and Consob was made public on the Web site of the two institutions.

### 6.2–6.4: Announcements, reporting, and consultations
- 6.2 Significant changes in financial policies:
  - Description — Article 8 (1) requires the monthly supervisory bulletin (published within two months) and general provisions extending beyond supervised entities are published in the Gazzetta Ufficiale della Repubblica Italiana. BI announces and explains regulatory changes via press releases and direct communication with affected intermediaries via BI branches. There is a presumption for consultation. BI issues interpretative recommendations, guidance, and clarifications through senior officials at seminars, conferences, and industry meetings. Detailed developments are also in the Annual Report.
  - Assessment — Observed.
- 6.3 Periodic public reports on pursuit of policy objectives:
  - Description — Annual Report explains modalities through which policy objectives are pursued. Monthly supervisory bulletin discusses new developments and implications for BI activities (example: March 2005 bulletin, p.13 on revised framework for international convergence of capital measurement and capital standards). Additional communications include public speeches and parliamentary testimony (examples cited: Deputy Director General on Basel 2 and IAS at November 2004 ABI Convention; Governor’s address at July 2004 ABI Ordinary Assembly; director of banking supervision testimony to financial committee in December 2004).
  - Assessment — Observed.
- 6.4 Presumption in favor of public consultations for substantive technical changes:
  - Description — No legal obligation, but common practice for BI to consult market on major regulatory changes, typically via associations or external experts. Consultations may be open periods for written comments or meetings. Timeframe not specified but advance publication and procedures suggest appropriateness.
  - Examples: consultation on credit derivatives via ABI between December 2004 and March 2005 (results under consideration by the BI Governor); public disclosure of a consultation paper on national exercise of discretion for Basel 2; engagement in EU-wide consultative procedures (CEBS consultation paper on supervisory disclosure dated March 23, 2005).
  - Assessment — Observed.

### VII. Public availability of information on financial policies — reporting and statistics
- 7.1 Periodic public report on major sector developments:
  - Description — Main periodic reports: monthly supervisory bulletin and Annual Report. Bulletin contains measures and significant decisions; Annual Report reviews supervisory activity during the previous year. Supplemented by periodic statistical bulletins reporting on main Italian credit and financial aggregates. All reports available on the BI Web site.
  - Assessment — Observed.
- 7.2 Public reporting of aggregate data:
  - Description — BI maintains extensive database and disseminates information through Annual Report, Economic Bulletin, speeches, Statistical Bulletin and supplements. Statistical bulletin is issued quarterly, with a monthly supplement. Data include intermediaries’ assets and liabilities, profits and losses, trading activities and risks, and interest rates by transaction and counterparty.
  - The BIP on-line application allows direct, free access to databases, searches, viewing, and downloading with methodological notes.
  - Article 8 (3) of the Banking Law imposes a statutory obligation to disclose statistics on entities subject to BI supervision.
  - BI provides aggregate statistics to supervised intermediaries based on individual submissions; may prepare ad hoc, fee-paying statistics for universities, research centers, public entities, banks and other financial institutions, subject to confidentiality.
  - BI collaborates with ECB and national central banks pursuant to Article 5 of the ESCB Statute; data aggregated for euro area statistics disclosed on the ECB Web site.
  - BI satisfies needs of National Statistical System (SISTAN) under Legislative Decree 322/1989 and sends monetary and financial statistics to institutions including IMF, BIS and OECD.
  - Assessment — Observed.
- 7.3 Disclosure of BI balance sheet and aggregate market transactions:
  - Description — BI does not prepare disaggregated financial accounts for functions it performs in banking supervision, nor engage in aggregate market transactions in that context. The balance sheet published in the Annual Report contains an income statement, notes to the accounts, information on subsidiary and associated companies, report of the board of auditors and report of the external auditors. Annual accounts approved by the Ordinary General Meeting of Shareholders held in Rome not later than 31 May each year (Article 6 of the Statute). Annual Report available on the BI Web site. BI sends the Ministry of Economy and Finance a monthly financial statement drawn up according to a template endorsed by the Ministry; these are published monthly in the BI Statistical Bulletin.
  - Assessment — Observed.
- 7.3.1 Aggregate disclosure of emergency financial support:
  - Description — Financial institutions may request emergency liquidity assistance (ELA) from the BI, but none have done so since establishment of the ESCB institutional framework in 1999. BI has full discretion as to applicable interest rate and eligible collateral within ECB prohibition on providing support for the purpose of state aid (i.e., below market rates). Most recent instances of ELA provision date back to the early 1990s, when a full account was disclosed through the BI Annual Report with information on operations’ terms and amount. If the BI acts as lender of last resort in future liquidity crises, the presumption is toward aggregate disclosure on an ex-post basis.
  - Assessment — Observed.

*Source: _cr0679 - 5.3 The role of oversight agencies with regard to payment systems should be publicly disclosed.*

### 7.4 Financial agencies should establish and maintain public information services.

### 7.4 Financial agencies should establish and maintain public information services.

### Public information services (7.4)
- The BI has a structured public information system to disseminate:
  - banking supervision rules, statistics and data, economic bulletins and papers, legal publications, the Annual Report on its activities, regional economic reports, speeches of senior officials, and texts of key testimony given to Parliamentary committees.
- Press releases are prepared by the Communication and Press Relations Division.
- All information material is published on the Web site.
- Relevant texts are distributed to both public and private institutions, and the media.
- The Communication and Press Relation Division of the Governor’s Secretariat is in daily contact with all media representatives to assist in interpretation of institutional communications.
- Press conferences are organized at the end of international meetings.
- Assessment: Observed

### Publications program (7.4.1)
- The BI publications program includes:
  - the supervisory bulletin, ongoing research and statistical publications, speeches of officials, nontechnical descriptions of the role and functions of the BI, and information about the activities of the ESCB.
- The BI is required by law to publish its Annual Report.
- The Annual Report contains information on banking supervisory activity and is issued five months after the end of the relevant reporting period.
- Access to these publications is free of charge.
- Assessment: Observed

### Senior officials' communications (7.4.2)
- BI senior officials regularly explain institutional objectives and performance via speeches at public meetings and media interviews.
- There is a presumption in favor of releasing the text of their statements to the public via the official bulletin, the media, or the Web site.
- The BI publicly reports on questions within its authority in parliamentary hearings whenever Parliament needs technical advice on subjects related to BI functions.
- Testimonies before Parliament are generally held by the Governor, the Director General and the Deputies of the Director General, and occasionally by other senior officials.
- Testimonies before Parliament are also disclosed to the public by the Parliament itself, in printed form and through its Web site.
- Assessment: Observed

### Availability of regulations and directives (7.5)
- Text of any general measures is posted on the BI Web site upon adoption, in addition to publication in the Gazzetta Ufficiale della Repubblica Italiana.
- The BI issues a compendium containing all relevant regulations, also available on its Web site.
- Assessment: Observed

### Deposit insurance and client asset protection disclosure (7.6)
- Legal basis: Banking Law (particularly Article 96) governs membership, nature of insurance systems, operating procedures and powers of the BI.
- Two insurance schemes operative in Italy:
  - Interbank Deposit Guarantee Fund (Fondo Interbancario di Tutela dei Depositi - FITD) — covering banks incorporated as joint stock companies and cooperative banks.
  - Mutual Bank Depositors Guarantee Fund (Fondo di Garanzia dei Depositanti del Credito Cooperativo) — for mutual banks.
- Schemes are private-law consortia among banks administered by representatives of member banks; originally voluntary, became compulsory with transposition of Community Directive 94/19/EC.
- Membership and coverage:
  - Membership is compulsory for Italian branches of non-EU banks unless the foreign scheme they participate in affords equivalent protection.
  - Italian branches of EU-banks may join an Italian scheme to increase coverage provided by the scheme of their home country (“topping-up”).
- Funding and operation:
  - Schemes are funded through members’ contributions.
  - Contribution of each member bank is proportional to the amount of its insured deposits and—in FITD’s case—is adjusted according to the bank’s risk profile as measured through a system of indicators.
  - Funding is ex-post: release of financial resources is requested to member banks when a crisis occurs.
- Reimbursement and interventions:
  - Schemes reimburse depositors in the event of the compulsory administrative liquidation of a bank.
  - Deposit reimbursement is capped at € 103,291 per depositor.
  - Exclusions depend on the type of deposit or category of depositor as provided in the law, according to European regulations.
  - Alternatively, schemes can support transfer of the bank’s assets and liabilities to another intermediary (“purchase and assumption” transaction) by bearing the transfer deficit.
  - Choice between reimbursing depositors by liquidating the bank and providing for transfer of assets and liabilities is made on the basis of which option carries the lowest cost.
  - Cases of voluntary intervention, out of compulsory liquidation, are provided for in the schemes’ by-laws.
- Disclosure and information channels:
  - All information on the nature of the schemes, funding modalities and operating procedures are included in the Banking Law and in the schemes’ by-laws, both publicly disclosed.
  - Relevant information is also available on the FITD Web site.
  - Banks are required to inform customers on the insurance scheme in which they participate, the level of coverage it offers and the type of deposits protected.
  - The BI Annual Report lists crisis procedures initiated; interventions effected are included in the DIS Annual Reports.
  - Additional public documentation: (i) final statements relating to special administration and compulsory liquidation procedures filed in the companies official register as per Articles 75 and 92 of the Banking Law; and (ii) merger projects submitted for shareholders’ approval filed in the companies’ official register as per Article 2502-bis of the Civil Code.
- Assessment: Observed

### Consumer protection and dispute settlement (7.7)
- The BI does not oversee consumer protection but has established disclosure practices requiring banks to disclose their consumer rights and dispute settlement arrangements.
- Assessment: Not applicable
- Details:
  - Regulation issued by the BI (largely redrafted in 2003) regarding disclosure of banking transactions and services requires banks to disclose to the public all relevant complaints processes and legal ways designed to protect consumer rights, both formal and not.
  - The BI answers consumer queries and complaints concerning those dealings and operations.
  - Main nonjudicial protection mechanisms:
    - “Ombudsman office” established by an agreement drafted by the Italian banking association (ABI) — competence for disputes among banks and clients when value is not too high; decisions are binding only for banks.
    - “Settlement commissions” provided by Legislative Decree n. 5 of 17 January 2003 — broader competence in matters regulated by the Banking Law and the Consolidated law on Financial Intermediation and can pronounce decisions binding all parties; BI has no responsibility in these bodies.
  - For cross border credit transfers (Directive 97/5), Legislative Decree 28.7.2000, n. 253 requires intermediaries to have dispute settlement processes; Decree of the Ministry of Economy and Finance 13.12.2001, n. 456 regulates criteria and requires intermediaries to provide customers with adequate information about appointment of deciding bodies and settlement procedures.

### Accountability and assurances of integrity (VIII; 8.1–8.4)
- Parliamentary reporting and appearances (8.1):
  - The BI publicly reports in parliamentary hearings and at meetings of the ICCS to report conduct of financial policies, explain policy objectives, and exchange views on the state of the financial system.
  - No pre-specified schedule for appearances; they occur when Parliament needs technical advice.
  - Officials are not required by law to appear before a designated public authority but stand available to do so.
  - Testimonies before Parliament are generally by the Governor, the Director General and the Deputies of the Director General, and occasionally by other senior officials.
  - Assessment: Observed
- Audited financial statements (8.2 and 8.2.1):
  - The BI publicly discloses audited financial statements (balance sheet, income statement, notes to the accounts) in the Annual Report, issued no later than five months following the end of its financial year.
  - According to Article 27 (1) of the ESCB Statute, the accounts of the BI are audited by independent external auditors recommended by the Governing Council of the ECB and approved by the European Council.
  - Auditors are chosen from a restricted list; external auditor’s mandate has a duration of three years, with the possibility to be renewed.
  - Information on accounting policies and any qualification to the statements are integral parts of publicly disclosed financial statements.
  - Assessment: Observed
- Internal governance and internal audit disclosure (8.2.2):
  - The BI Statute provides rules concerning conflicts of interests of the BI’s officials and governing bodies, and general rules on staff conduct.
  - BI functions and organizational structure are explained in a pamphlet “le persone e l’organizzazione” available on its Web site, disclosing the existence of an Internal Inspectorate.
  - The Internal Inspectorate drafts information on auditing activity during the year and releases it in the Annual Report.
  - Assessment: Observed
  - Governance observations and transparency issues:
    - Responsibilities for policy formulation and implementation are vested solely in the Governor (or delegated by the Governor).
    - No internal governance arrangements for oversight of policy; accountability is upheld through reporting to Parliament and the Governor’s participation in the ICCS.
    - The Board is essentially responsible for management and administration of the Bank, including “determining the rules and terms and conditions for the Bank’s operations” (Article 20, 3rd indent).
    - Article 3 of the BI Statute permits entities supervised by the BI to own its share capital; banks are voting members of the General Meeting of Shareholders, electing the Board of Directors and the Board Committee.
    - Decree of July 17, 1947 (Article 5) precludes influence of Board members in matters under the competence of the ICCS and provides for a representative of the Treasury Ministry to intervene in the General Meeting of Shareholders (unclear voting rights).
    - Two transparency issues:
      - fragmentation of the legal basis since provisions supplementing the BI Statute are established in other legal texts of equivalent hierarchy;
      - since privatization, it is unclear whether the majority of the BI share capital is still held by public institutions as per Article 3 of the BI Statute.
    - A table in p.53 of the 2004 Annual Report provides information on holdings by broad categories of institutions; updated structure of shareholding could be compiled with reference to individual banks’ balance sheets.
- Operating expenses and revenues disclosure (8.3):
  - The BI financial statements published in the Annual Report include information on operating expenses and revenues.
  - Assessment: Observed
- Standards for conduct of personal financial affairs and conflicts of interest (8.4 and 8.4.1):
  - There are standards and rules to prevent exploitation of conflicts of interest, but detailed rules are not publicly disclosed; only general rules of conduct for staff as provided in the BI’s Statute are disclosed.
  - Detailed rules are contained in an internal staff regulation (Regolamento del Personale) deposited with the CNEL (Consiglio nazionale dell’economia e del lavoro); rules are summarized on the BI Web site and available upon request from CNEL.
  - Key provisions from internal staff regulation:
    - Title III, Part I contains obligations, prohibitions, incompatibilities and responsibility of BI staff.
    - According to Article 12 (4.d), employees are obliged to notify the BI of any interests—financial or nonfinancial—in relation to matters falling within the remit of their office that can generate potential conflicts of interest.
    - Staff are prevented from taking advantage of knowledge on activities performed by the BI, performing activities contrary to BI interests, taking on other employment, and engaging in securities transactions in stock exchanges.
  - Disciplinary procedures and sanctions:
    - A special body “Commissione di disciplina” proposes disciplinary sanctions; members are designated by the Governor: one Deputy Director General (chairman), the head of the Personnel Management Department, and three other members chosen among senior staff.
    - Possible disciplinary sanctions:
      - censure;
      - reduction in salary;
      - suspension (with suspension of salary payment) for a period of 6 months to 1 year;
      - dismissal.
  - No specific provision offering legal protection to the BI and its employees (public officials) against possibility of legal action stemming from measures adopted in performance of their functions.
  - Assessment (8.4): Observed
  - Assessment (8.4.1): Not applicable

### Recommended action plan (excerpt from Table 2)
- V. Clarity of Roles, Responsibilities and Objectives
  - 5.1.1: Publicly disclose and explain the objectives of stability, efficiency and competitiveness.
  - 5.1.4: Publicly disclose the applicability of Article 14.2 of the ESCB Statute as regards the dismissal of the Governor and the general criteria for removal of the heads and members of governing bodies in the absence of such provisions in the BI Statute.
    - Follow-up noted: BI amended the on-line pamphlet “le persone e l’organizzazione.” The recently adopted Savings Law now explicitly mentions Article 14.2 of the ESCB Statute for the Governor’s dismissal procedures.
- VI. Open Process for Formulating and Reporting Financial Policies
  - 6.1.5: Publicly disclose details on protocols that define practical modalities of cooperation between domestic financial agencies and actual procedures followed for information sharing.
    - Follow-up noted: The MOU governing cooperation and exchange of information between BI and Consob was made public on the Web site of the two institutions.

*Italic source attribution:* _Source: _cr0679 - 7.4 Financial agencies should establish and maintain public information services._

### 7.      BI notes the assessment’s recognition of the very high degree of compliance of the

### _cr0679 - 7.      BI notes the assessment’s recognition of the very high degree of compliance of the

### Recognition of compliance with MFPT Code
- The assessment recognizes a "very high degree of compliance" of the Italian banking supervisory system with the IMF Code of Good Practices on Transparency in Monetary and Financial Policies (MFPT Code).
- Positive features highlighted by the assessment:
  - (i) Extensive public information on banking supervision through the Annual Report, the publication of all general measures in the Gazzetta Ufficiale della Repubblica Italiana and in the Bollettino di vigilanza, a wide-ranging and detailed statistical publication program, frequent Parliamentary hearings, and speeches by the Governor, other top officers and senior officials.
  - (ii) BI’s cooperation with other domestic and foreign financial agencies in day-to-day activities through exchange of information and coordinated action (the Memorandums of Understanding with Consob and ISVAP are available on both authorities’ Web sites).
  - (iii) The practice of public consultation with market participants on significant regulatory changes.

### Accountability and reporting (Practice 5.1.1 and Annual Report)
- The Annual Report contains a section "about. 100 pages in length" setting out the criteria, methods and results of supervisory activities, fulfilling the accountability obligation established by the 1993 Banking Law.
- Historical practice and recent emphases:
  - The objectives of the banking supervisory function were explained initially in the 1993 Annual Report.
  - The 2003 Annual Report contains a detailed description of criteria and methods of supervision.
  - The 2004 Annual Report focuses on regulatory changes such as the implementation of Basel II and IAS/IFRS, structural changes in the banking system such as international openness, and methods of macroprudential analysis.
- The Savings Law now provides for half-yearly reporting to both Parliament and Government.
- BI is studying the possibility of bringing out a new report on the evolution of the Italian banking and financial system and the issues relevant to its regulatory and supervisory mandate.

### Objectives of supervision and interpretation of Article 5 (Consolidated Law on Banking, 1993)
- Article 5 objectives listed: sound and prudent management of individual banks; the overall stability, efficiency and competitiveness of the financial system; and compliance with the provisions concerning credit.
- Legislators deemed these objectives to be strictly complementary.
- BI’s interpretation:
  - Competition is essential to efficiency (both operating efficiency and in the allocation of resources) and hence to financial stability.
  - Stability and efficiency are objectives common to all supervisory authorities.
  - Competitiveness refers to the necessity that prices and the quality of products and services offered by Italian banks meet the needs of firms and households.

### Appointment and dismissal safeguards (Governor, Director General, Deputies)
- Dismissal of the Governor:
  - Article 19.8 of the Savings Law established new procedures for the appointment and dismissal of the Governor that refers to article 14.2 of the ESCB/ECB Statute as being directly enforceable in all Member States; the grounds for its application are found in the principle of equal treatment throughout the ESCB.
  - Any decision concerning the dismissal of a Governor may be referred to the Court of Justice by the Governor concerned or by the Governing Council of the ECB on grounds of infringement of the Treaty or of any rule of law relating to its application.
- BI Statute and senior management:
  - BI Statute provides for the appointment and dismissal of the Director General and the two Deputy Directors General.
  - The principles and criteria for dismissal are specified in the general administrative law framework on public duties and in case law, according to which officials may be removed for failure to act in accordance with the purposes of their institutions.
  - The EMI and ECB Convergence Reports and the ECB opinion imply that the safeguards against arbitrary dismissal in the ESCB/ECB Statute also apply to the Director General and the two Deputy Directors General who perform ESCB-related tasks, in particular where they serve as deputy for the Governor.
- Remedies and uniformity:
  - Without prejudice to remedies provided by national jurisdictions, to ensure uniform judgment in all the Member States on this matter, the Court of Justice referral mechanism applies as described above.

### Responsibilities for policy formulation and implementation
- The Savings Law has attributed responsibilities for policy formulation and implementation to the whole Directorate.

*Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0679.pdf*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0679.pdf_