(AGENPARL) – Thu 13 November 2025 Systemic risk in an era of radical change
Keynote Speech by Sergio Nicoletti Altimari,
Deputy Governor of Banca d’Italia*
Roma Tre – UNIDROIT Centre for Transnational Commercial Law
and International Arbitration, Second Annual Conference
Rome, 13 November 2025
It is a pleasure to open the second Annual Conference organised by the Roma
Tre – UNIDROIT Centre. The theme of this year’s conference, “The Governance of Risk in
a Risk Society”, could not be more timely.
We are living through a period of profound transformation. Geopolitical tensions, trade
disputes and rapid technological and financial innovation are reshaping the global
landscape. In this context, the governance of risk is not merely a technical or regulatory
challenge. It is a foundational issue that must be addressed to secure the sustainable
progress of our societies.
For central banks, the governance of risk is paramount. It underpins our monetary policy
and financial stability mandates, the prudential frameworks, and the oversight of payment
systems. It lies at the heart of our discussions at European and international level, and
of our dialogue with market participants, academics and legal experts – such as those
gathered here today.
The integrated perspective on which this conference is based – drawing on private, public
and international law – reflects the complexity of governing risk today. Such a broad
approach is essential because risk is systemic, interconnected and global.
A weakening multilateralism
In the past decades, global integration reached exceptional levels. Trade liberalisation,
financial openness and stronger multilateral institutions fostered cooperation and
growth. Despite clear limits and flaws in the process of globalization – which contributed
to today’s frictions – the belief that economic openness could underpin peace and
prosperity was widespread. Economies and financial systems became increasingly
interconnected.
I wish to thank Luca Moller and Stefano Montemaggi for their precious contribution to these notes.
This environment has changed markedly with the steady rise in geopolitical tensions.
The architecture of multilateralism – based on institutional dialogue and shared rules –
is now challenged by strategic rivalry and the resurgence of protectionism.
International trade, once a key engine of integration, is increasingly viewed through
the lenses of national security and geopolitical alignment. Economic interdependence,
previously seen as a source of mutual benefit, is often perceived as a vulnerability.
Fragmentation of the international landscape, however measured, is on the rise1.
From the perspective of today’s conference, the weakening of multilateral institutions
and regulatory cooperation is especially concerning. Decision making has become more
difficult and contentious in key international fora and, as a consequence, a coordinated
response to global challenges is becoming very arduous, if not impossible.
This reconfiguration has far-reaching implications in a world still characterised by
deep interconnections: through global value chains, cross-border financial positions
and technological dependencies, economies remain highly integrated. In some fields,
actually, economic linkages are even increasing; for example, the digital economy is
enabling international trade in activities once confined within national borders.
Emerging vulnerabilities in the financial system
The change in the global landscape is clearly visible in the financial sector.
After the Global Financial Crisis of 2008-09, there was a broad international consensus
on the need to strengthen the prudential framework for the banking system, the
epicentre of the turmoil. It was recognised that effective policy action required intense
regulatory and supervisory coordination and a stronger role for multilateral bodies.
The creation of the Financial Stability Board by the G20 and the Basel III reforms
– adopted to a large extent by all major jurisdictions – are emblematic examples of this
collective effort.
In Europe, the reshaping of the supervisory and crisis management framework, with the
European System of Financial Supervision, the Single Supervisory Mechanism and the
Single Resolution Mechanism, has significantly advanced integration and reinforced
oversight.
These reforms have largely delivered on their promise: the banking sector is now more
resilient, with higher capital and liquidity buffers, and has withstood major shocks – from
the pandemic to the energy crisis and the swift tightening of monetary policy.
Yet new and significant risks have emerged.
See, for example, J. Fernández-Villaverde, T. Mineyama and D Song (2024), ‘Are we fragmented yet?
Measuring geopolitical fragmentation and its causal effects’, NBER Working paper, no. 32638.
First, non-bank financial institutions now play a more central role in credit intermediation,
asset management and core markets. This broad and diverse sector – from insurers to
hedge funds – accounts for nearly half of global financial assets. Many of these entities
perform bank-like functions under lighter regulation and supervisory scrutiny and may
operate with high leverage and liquidity mismatches. Growing links between banks
and non-banks mean that some of the risks addressed by the post-crisis reforms can
re-enter the system “through the back door”, heightening the potential for contagion
and systemic stress2.
Second, in some jurisdictions there is a renewed push for deregulation, in the name of
efficiency or competitiveness. Simplifying overly complex rules is justified, and regulation
must avoid hindering innovation. However, unilateral and uncoordinated measures across
jurisdictions risk eroding essential safeguards, widening international asymmetries and
encouraging regulatory arbitrage.
Third, technological change is transforming finance3. The rapid advance of artificial
intelligence and digital infrastructures is reshaping business models and market
structures. These innovations bring major opportunities, but they also raise new
regulatory and supervisory challenges. Digitalisation has systemic implications, affecting
operational resilience, cyber security, data governance and consumer protection4. In a
world where digital services and data flow easily across borders, fragmented regulatory
responses risk undermining both stability and trust.
The fast growth of crypto-assets illustrate these tensions5. If developed outside sound
regulatory frameworks, such instruments may pose risks to financial stability and
undermine market integrity. The recent surge of stablecoins presents a different set of
issues – extending to risks for monetary sovereignty – that also require proper regulation6.
Uncoordinated regulatory responses
Authorities have not remained passive and important steps have been taken to adapt
regulation to evolving risks.
The European Union’s Digital Finance Strategy is a prominent example, which has already
yielded important legislation.
The Digital Operational Resilience Act (DORA) establishes harmonised requirements
for ICT risk management across the financial sector. The AI Act introduces a risk-based
framework for artificial intelligence systems, including their deployment in financial
Basel Committee on Banking Supervision, Banks’ interconnections with non-bank financial
intermediaries, July 2025.
Financial Stability Board, The Financial Stability Implications of Artificial Intelligence, November 2024.
Basel Committee on Banking Supervision, Digitalisation of finance, May 2024.
European Systemic Risk Board, Crypto-assets and decentralised finance, October 2025.
F. Panetta, The Governor’s concluding remarks for 2024, May 2025.
services. The Markets in Crypto-Assets Regulation (MiCAR) sets up a comprehensive
regime for crypto-assets – including stablecoins – and for related service providers, with
a view to safeguarding market integrity and consumer protection.
Similar initiatives in these fields are being undertaken in other jurisdictions, but, unlike
past occasions, they are neither jointly designed nor coordinated. For instance, there are
significant differences in the regulatory approach for stablecoins between MiCAR and
the Genius Act recently adopted in the US; other jurisdictions are moving in still different
directions7.
In a highly interconnected world, this lack of alignment is clearly suboptimal and may
generate serious problems down the road.
Europe is deeply integrated into global production and financial networks and is
particularly exposed to geopolitical shifts and regulatory fragmentation. It needs
to make all efforts to uphold international cooperation, defend openness and legal
certainty, and work to preserve a rule-based global order even in a more fragmented
landscape.
The importance of a “transnational” private and corporate law
While at this juncture the relevance of projects aimed at harmonising the law – both
public and private – seems waning, the law remains the cornerstone of risk governance;
it ensures market integrity and protects the interests of investors, firms and consumers.
The idea that informal practices and norms resulting from international trade and
business could replace formal rulemaking would be, in this regard, illusory. The
harmonizing power of the lex mercatoria cannot substitute the international institutions
tasked with enhancing and aligning the regulatory frameworks.
That said, bottom-up soft harmonization – through shared contractual practices, model
clauses, and corporate governance standards – can play a valuable complementary
role. It can enhance the effectiveness of regulation, reduce asymmetries, and facilitate
cross-border transactions.
In the EU, in particular, the need to strengthen legal coherence goes well beyond
prudential regulation. The lack of a harmonized legal substratum in many areas of
private law across Member States – especially in corporate law but also in contract
and tort law – creates complexity and hinders the development of a truly integrated
financial sector and financial market, preventing the full realization of the benefits
associated with a broad and deep internal market. There is clearly ample room for
enhanced legislative action, but the complementary role of soft harmonization could
be extremely valuable in the European context.
C. Scotti, Stablecoins in the Payments Ecosystem: Reflections on Responsible Innovation, September 2025.
Strengthening the soft instruments that are intended to promote a “transnational”
private and commercial law is therefore a matter of strategic interest. It can support
market efficiency and reinforce the broader architecture of financial stability.
From this perspective, the contribution of think tanks like the Roma Tre – UNIDROIT
Centre is particularly relevant. Promoting convergence, mutual understanding, and the
development of shared standards is an essential ingredient of a resilient and efficient
financial system.
* * *
Today’s problems must be confronted not with resignation, but with resolve. Let us
continue to work together to ensure that risk remains governable, even in a world that
is increasingly difficult to predict.
Let me thank all participants to this event for their contributions and the organizers
for having set up this very interesting conference. I wish you all a productive and
stimulating discussion.
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