Ignazio Visco: Statement - meeting of the Development Committee

Statement by Mr Ignazio Visco, Governor of the Bank of Italy and Governor of the Constituency of Albania, Greece, Italy, Malta, Portugal, San Marino and Timor-Leste, at the 101st Meeting (virtual) of the Development Committee (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries), Washington DC, 17 April 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

The crisis

The crisis we are facing is unprecedented in its speed, diffusion and depth. And it is a crisis that affects us profoundly: it touches our own lives, our network of social relations, and our way of living as a community. Because the only way to limit the contagion is a protracted period of social distancing, significant economic pain seems unavoidable in all countries. The toll on the real economy - workers, as well as businesses - will be large; and the risk of financial instability will inevitably be high.

This exceptional situation requires actions to be taken at all levels: national, regional and global. Indeed, precisely because the crisis is global, the answer must be global. Increased coordination between countries in response to the pandemic will allow all of us to come out of it together, sooner and at a lower cost. And we must recognize that significant external assistance will be needed.

If the response falls short of what is required to avoid permanent damage to potential capacity, including human and organizational capital, the scale of long-term costs could be much larger than what we are currently projecting, even under the most severe scenarios.