The European Central Bank, Italy, and the Integration of Eastern Europe

In ancient times the 30th of March was the day of the festival for Salus Publica Populi Romani — the goddess of the public welfare of the Roman people. In the past, we would have prayed for prosperity, leaving matters in the hands of Salus. Today, treasuring our welfare, we prefer to take things into our own hands and think about practical ways of how to improve our wellbeing. In this context, I would like to share some thoughts with you on European economic integration and its impact on the welfare of the citizens of Italy and the European Union (EU), as well as countries in Eastern Europe that are outside the EU. I would like to present a central banker’s perspective on these issues. In my paper, first I will discuss how the European Central Bank (ECB) contributes to the welfare of euro area citizens, using the example of Italy. I shall argue that the best strategy in this respect is to maintain price stability and to help ensure efficient financial markets. I will also mention that in order to maximise the welfare gains from a stability-oriented monetary policy, sound fiscal policies and flexible labour and product markets are needed, a message that was also reiterated at the recent spring European Council. Then, I will provide a few facts on the current state of economic integration in Europe, focusing in particular on trade and foreign direct investment flows between Italy and Eastern Europe. I will demonstrate that European economic integration brings many opportunities for increased welfare, but also poses some challenges.