E-encyclopedia of banking, stock exchange and finance

Selected letter: A


    A letter that usually precedes a financial report. An accountant's letter is produced by a company's independent auditors. It summarizes the scope of the accountant's audit and its results in very general terms. The term is frequently used interchangeably with the term "auditor's opinion".


    Accounting price represents a value indicator, which replaces efficient price. It is usually used synonymously with shadow price. Unlike shadow prices, accounting price comes near, imperfectly, to the neoclassical economics theory of price. For instance, the accounting price reflects the economic value of input and output in opposition to their financial and market value.
    Editor: Carmen NOTARO
    © 2010 ASSONEBB


    Acquirente Unico S.p.A (AU) is the Italian company that was established in 1999 by GRTN (Gestore della Rete di Trasmissione Nazionale), with the mission of ensuring continuous, secure, efficient and competitively priced electricity supply to captive customers, so as to enable them to reap the benefits of the electricity liberalisation process. Therefore, AU is vested with the task of purchasing electricity in the market on the most favourable terms and of selling it to distributors for supply to captive customers.
    Link: www.acquirenteunico.it
    Editor: Bianca GIANNINI
    © 2010 ASSONEB


    All the actions taken to minimize the effects of global warming which result in an evolutionary process of adjustment in response to actual or expected climate change in human and natural systems. Adaptation allows to moderate potential damage, and to guarantee the preservation of species. It can be distinguished between anticipatory or proactive (if it takes place before impacts are observed), autonomous or spontaneous (if natural and human systems change autonomously, not necessarily as a response to climate change), and planned adaptation (if a policy measure has been specifically deliberated because an intervention in the state of ecosystems is required). Assessing adaptation helps identify and evaluate the possible existing alternatives in terms of potential benefits and costs.

    Editor: Melania MICHETTI
    © 2009 ASSONEBB

  • ADVERSE SELECTION (Encyclopedia)


    Adverse selection is the difficulty to select and distinguish healthy companies, with a high credit rating, from those that are riskier. Adverse selection in the field of banking intermediaries is an issue concerning the ex-ante problem related to the provision of funding. In fact, many companies look for funding from the bank that has to select, given its limited resources. Screening is a useful technique to solve this problem. Adverse selection arises with asymmetric information and is of particular relevance in the areas of contractual relationships, such as in the definition of optimal contracts between principals agents.

    The role of bank is to “intermediate” between players who are in financial deficit and those experiencing a surplus in order to match their need and invest. Players who are in financial deficit seek monetary resources by placing “liabilities” on the market and by offering them to those in surplus. The problem is therefore to reconcile the preferences expressed by buyers as compared with those made by the issuers of liabilities in terms of maturity, yield, value fluctuation, etc...
    Operators in surplus have difficulties in identifying and evaluating the quality of those in deficit, and they must take into account the uncertainty associated with future events, their degree of risk aversion and the preference of short term assets. On the other hand, those in deficit prefer to issue long term liabilities, to not disclose their quality of credit and, once the funds are obtained, they prefer to opt for more profitable but risky projects.
    As a matter of fact, a direct transfer of resources from subjects in surplus to subjects in deficit is rare.
    Consequently, the foundations are laid for the presence of a third party, who is able to match the different needs and to interact by transferring and finally reallocating financial resources within the economic system. Ultimately, financial intermediaries realise the channeling of savings into investments.
    The existence and role of financial intermediaries is explained by the traditional theory that has developed a number of reasons to justify the development of this phenomenon. Among these, we can find the function of evaluating and selecting business projects within the theoretical paradigm of incomplete markets and imperfect information. This theory emphases the activities of banks by recognizing their critical role when it comes to the ability of solving the problems of asymmetric information that are relevant to an imperfect market - adverse selection and moral hazard. Thanks to the role played by financial intermediaries, such problems may be partly solved or at least transferred to the same financial intermediaries who have the means to bear any adverse effects, thus avoiding their transfer onto a single or a small number of savers.
    In brief, adverse selection concerns the difficulty to select and distinguish healthy companies, those with a high credit rating, from those that are riskier. Adverse selection in the field of banking intermediaries is an issue concerning an ex-ante situation to the provision of funding. This problem surfaces in a context where many companies seek to draw from finance resources at the disposal of a given bank. Screening can be regarded as a technique to solve this problem, which the bank can implement through the employment of professionals and the use of skilled and expensive methods, unlike what a single economic agent can usually do, given the high costs and the limited resources he/she may dispose of.
    1) Adverse Selection: the case of insurance intermediaries
    In the case of insurance intermediaries adverse selection and moral hazard occur in different situations. The first phenomenon is usually experienced prior to the signing of the insurance contract, in case the insurer does not have sufficient information to classify its clients into homogeneous classes of risk, namely in classes that are characterised by the same probability of suffering a damage such to make the insurer establish an equal premium for all those insured against the same risk. In such cases, the premium would result too high for low-risk individuals and too cheap for those expected as the riskiest, thus generating an accumulation of bad risks and the consequent default of the insurance company. The second phenomenon occurs after the signing of the contract and it characterises the actions taken by the insured leading to changes in the likelihood of risk as originally estimated by the insurance company or the amount of the reimbursement … such a case is encountered when, being covered by the insurance contract, the insured reduce the caution they would have applied had they not been insured, thus making the insured event more likely and its reimbursement higher.
    In order to counter these problems, the insurance companies may seek to acquire more detailed information on the conduct of the insured agents and to employ measures to discourage and combat these phenomena, by:
    a) segmenting customers into homogeneous risk classes,
    b) making it compulsory to take out an insurance for all the subjects exposed to certain types of risks,
    c) involving insured agents in sharing the risk,
    d) tying the premium to the history of the person to be insured,
    e) reducing the premium if the insured implements special precautions to reduce the probability of the risk occuring.
    The first two types of measures tend to contain the phenomenon of adverse selection, the last three types are mostly used to limit moral hazard by making virtuous behaviours cost-effective for the insured .
    Information is therefore essential and the basis of every decision linked to the activities of financial intermediaries. A proper information system is key to the solution/minimization of problems arising from asymmetric information.
    2) Adverse Selection: the Principal-agent case
    In addition to the financial intermediaries, asymmetric information problems (adverse selection and moral hazard) are of particular relevance in the areas of contractual relationships, such as in the definition of optimal contracts between the main player (principal), identifiable for example with a company shareholders' meeting, and the agent (agent) identifiable with the company CEO. The principal is the one who offers a contract and who is not familiar with the capabilities of the agent to whom the contract is offered. In the case of adverse selection, it is the agent who knows his/her own true professional skills, while the principal can only guess them and learn them over time, but only after having signed the contract. The case of moral hazard arises when the agent's actions are not fully verifiable by the principal: this case is justified by the fact that if every action of the agent were to be checked and approved by the principal, then his/her role would be unnecessary and it would represent only an additional cost for the company.
    3) Adverse Selection: the case of Akerlof’s lemons
    When dealing with problems of adverse selection and moral hazard, the most frequently cited and studied example in economics is the one developed by George Akerlof in relation to the used car market, which distinguishes cars classified as good from those defined as “lemons”. In a few words, in this market only sellers know the quality of the car on sale while buyers ignore its characteristics. If buyers were aware of which car is good, they would pay the price they feel reasonable for a good car; but since there are also “lemons”, they will be willing to pay a price that, based on the probability that the car on sale is a lemon, averages between the reasonable price for a bad car and the one judged as appropriate for a good car. Considering the price lower than the correct one, good car sellers will not be inclined to sell, while sales of lemons will be promoted at a higher price than their value. Considering the trend in sales of lemons, buyers will no longer be inclined to pay the requested price, thereby generating a negative trend in sales, to the point that transactions will decline to zero. This situation generates the need for a third party who acts as an intermediary and has the tools and skills to discharge that function.

    Cucinotta G., Nieri L. (2005)
    "Le assicurazioni, la gestione del rischio in una economia moderna", Il Mulino editore.
    Desiderio Luigi, Molle Giacomo. (2005) "Manuale di diritto bancario e dell'intermediazione finanziaria", Giuffrè editore.
    Di Giorgio G. (2004) "Lezioni di economia monetaria", Cedam editore.
    Guida Roberto. (2004) "La Bancassicurazione: modelli e tendenze del rapporto tra banche e assicurazioni", Cedam editore.
    Locatelli Rossella, Morpurgo Cristina, Zanette Alfeo. (2002) "L'integrazione tra banche e compagnie di assicurazione e il modello dei conglomerati finanziari in Europa", Enaudi editore.
    Patroni Griffi e Ricolfi. (1997) "La distribuzione bancaria di prodotti assicurativi in banche ed assicurazioni fra cooperazione e concorrenza", Giuffrè editore.
    Quagliariello Mario. (2001) "I rapporti tra banche e assicurazioni in Italia e in Europa: aspetti empirici e problemi di regolamentazione", Luiss University Press.
    Quagliariello Mario. (2003) "La bancassicurazione: profili operativi e scelte regolamentari", Luiss University Press.
    Ruozi Roberto. (2004) "Economia e gestione della banca", Egea editrice.
    © 2018 ASSONEBB


    The African Development Bank is a multilateral development bank composed of 53 regional member countries and 24 non-regional member countries. AfDB, together with the African Development Fund and the Nigerian Trust Fund, forms the African Development Bank Group. Founded in 1964, AfDB began its activity in 1967 from its headquarters in Abidjan, in the Ivory Coast. In 2003, however, the Board of Governors decided to relocate temporarily to Tunisia, due to the political tensions characterising the Ivory Coast area. The Bank’s main objective is to promote sustainable economic development with a vision towards reducing poverty in the African continent and increasing indigenous population’s quality of life. To achieve this objective the Bank finances development programmes and projects particularly focused on water provision, training, health and rural infrastructure.
    Krasner, S. D. (1981), Power Structures and Regional Development Banks, International Organization, Vol. 35, N. 2, pp. 303-328, Cambridge University Press.

    © 2009 ASSONEBB


    Ageing population refers to a process by which older individuals become a proportionally larger share of the population, because the older members are growing faster than the total population. The phenomenon characterizes not only industrialized countries, where the trend is much more evident, but also developing countries and, according United Nations' analysis, the trend will continue at least until 2050. Mortality and fertility decline from higher to lower levels, reshaping the age structure of the population in most regions of the world and shifting relative weight from younger to older groups. The specific indicators considered are the total fertility rate, life expectancy and the survival rate. To the economic system, the increasing number of potential beneficiaries of health and pension funds - those mainly over 65 years old - are supported by a pretty smaller portion of potential contributors - those in the economically active ages of 15-64. Labor force participation among the older population has been declining worldwide.


    Editor: Marianna RONCHINI

  • Aggregate OTC derivatives data

    The Financial Stability Board (Encyclopedia) has published a feasibility study on the possible solution for the creation of a unique OTC derivatives data repository.

    The FSB states that "G20 Leaders agreed, as part of their commitments regarding OTC derivatives reforms, that all OTC derivatives contracts should be reported to trade repositories (TRs). The FSB was requested to assess whether implementation of these reforms is sufficient to improve transparency in the derivatives markets, mitigate systemic risk, and protect against market abuse."

    You can dowload the paper here.


    The TRIPS Agreement is one of three pillars of the World Trade Organization (WTO) and has been in force since 1995. The main reasons for the agreement are in order to reduce distortions and impediments to international trade, to promote effective and adequate protection of intellectual propriety rights and to ensure that measures and procedures to enforce intellectual propriety rights do not themselves become barriers to trade. For the first time, all aspects of intellectual property are covered in one multilateral agreement: copyrights and neighboring rights, trademarks for goods and services, geographical indications, industrial designs, patents, topographies for microchips as well as undisclosed information. The protection and enforcement of intellectual propriety rights should contribute to the promotion of technological innovation, to the mutual advantage of producers and users of technological knowledge and in a manner conductive to social and economic welfare and to balance of rights and obligations.

    Editor: Giovanni AVERSA


    The distinction between agricultural and commercial enterprises dates back to the post-war period. Indeed, the legislative order dating back to before the Second World War considered agriculture as a way of exercising property right or another right in rem on the land. With the codification of the legislative order in 1942, agricultural activity is recognised as an entrepreneurial activity. Article 2135 of the civil code stated: "an agricultural entrepreneur is one whose activity involves cultivation of the soil, forestry, animal husbandry and all connected activities. The activities meant for the transformation or alienation of agricultural products when they fall within the normal exercise of agriculture are considered connected activities ". Article 2083 also states that "the direct cultivators of the soil, the craftsmen, the little traders and those who exercise the professional activity using predominantly their own work and their family’s work are entrepreneurs". Reading these dispositions we can gather that every activity carried out by agricultural entrepreneurs, whatever their category is, is entrepreneurial activity.
    In general, entrepreneurs use specific production factors to carry out their activities that, as a whole, form the enterprise or, in some cases, the enterprises. The enterprise, indeed, is defined as "the totality of property organised by an entrepreneur for the exercise of his/her business" (art. 2555 of the civil code) and it is, therefore, the means for entrepreneurs to reach their objective. It follows that also a farm is the fruit of entrepreneurial choices and it is, therefore, an essential part of the entrepreneurial activity.
    © 2009 ASSONEBB


    The Agricultural Bank of China (ABC), is one of the four state-owned commercial banks in the People's Republic of China (PRC). It was founded in 1951 and It’s part of "Big Four" with: China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC). Its functions are primarily the funds disbursement from the state budget and funding agricultural. The ABC specializes in providing financing to China's agricultural sector and offers wholesale and retail banking services to farmers, township and village enterprises and other rural institutions. After the establishment of the People's Republic of China in 1949, ABC has been formed and abolished several times. Since the late 1970s, the Bank has evolved from a state-owned specialized bank to a state-controlled commercial bank. It’s listed on Shanghai and Hong Kong Stock Exchange in the 2010. As of 2011, it ranks 8th among the Top 1000 World Banks.

    Editor: Giovanni AVERSA


    In general, the term "agricultural food chain" in agro-economic studies refers to the combination of agents and activities that, with regards to a product or a group of products of agricultural origin, allow the production of their raw material, their transfer in time and space, and their transformation if needed, making it possible to adjust to the consumer’s taste and needs.
    Therefore, the agricultural food chain can be considered as a vertical section of agribusiness, delimited either by referring to a specific final product, or by referring to a group of products derived from the same agricultural product. Moreover, the delimitation of an agricultural food chain, once the product we want to refer to is clearly identified, requires the outline of the technical itinerary for the production of that very product, the definition of the geographical space taken into consideration (country, region, group of countries, world) and the reference period.
    Agricultural food chain studies can basically concern two aspects:
    - Identification and description of the agricultural food chain structure, that is to say the itineraries followed by the products that are the subject of analysis, of the agents that intervene on them (it can be both private companies and public operators), and of the operations carried out by the latter along the agricultural food chain;
    - Analysis of the functioning and adjusting mechanisms of the agricultural food chain and therefore of the way in which the relations between the agents that are part of it are determined, considering both horizontal (between companies involved in the same activities) and vertical relations (from the supplier to the consumer).
    The study and the knowledge of agricultural food chains become significant for the parties that are involved because it allows them to develop short-term and long-term strategies with greater awareness, and for the public operators as well during the elaboration and evaluation process of the effects of agricultural and agri-food policies.
    Being defined as a vertical section of agribusiness, it is clear that the agricultural food chain includes a large number of agents who carry out more and more complex and articulate functions. Therefore, all the agents committed to production, transformation, distribution and marketing as well as final consumption and supply of inputs operate in the agricultural food chain of a product. We can add to these agents also the so-called "institutional" subjects, such as the national and supranational bodies (for example the European Union) that intervene during the different steps of the agricultural food chain, the public markets, the associations of agricultural producers and traders.
    In brief, we can say that the functions carried out in an agricultural food chain can be divided in business functions (developed at different levels of the agricultural food chain), physical functions (i.e. stocking, transformation, shipping, etc.), and facilitative functions, aiming to make the previous functions easier to perform and to improve efficiency (i.e. funding, assumption of risks, information, etc…)
    The agricultural food chain can be simple or complex according to the number of passages that a product undergoes before it arrives to the consumer: usually fruit and vegetables food chains are simpler than the dairy and meat ones.
    The dynamics of agricultural food chains, as they are placed in a specific space, are strongly influenced by the socio-economic and institutional context.
    Namely, the first stage of the analysis consists in the identification of the product (or a group of products) that meets a certain food need; once this is done, it is necessary to outline the technical itinerary for the production of that very product, that is to say the succession of basic operations that form the production process. In the production process, an "agricultural" phase and an "industrial" (or "artisanal") phase can be distinguished. The following stage consists in the identification of the different types of production units where the considered production process takes place. The last stage consists in the identification of the various types of actors involved in the production process with various roles.
    Editor: Barbara PANCINO
    © 2009 ASSONEBB




    Farm business which provide hospitality and catering. 
    According to law 96/2006, agritourism business consists in all the reception and hospitality activities provided by agricultural entrepreneurs, also in partnership or in corporations, by using their own farm in connection with farming, forestry and breeding activities. Agricultural entrepreneurs and their relatives, as well as temporary, permanent and part-time workers (who are all considered agricultural workers for the purposes of social security, insurance and taxation) can be employed in the agritourism business. Third parties can be hired only when they are involved in complementary services and activities.
    The agritourism activities include:
    - Providing accommodations or open spaces designed for campers;
    - Providing meals and beverages mainly made of products produced on the premises or in nearby farms, including alcoholic drinks and spirits, with a predilection for typical products bearing PDO, PGI, TGI, CDO and CGDO quality labels, or included in the national list of traditional agro-alimentary products;
    - Arranging the tasting of farm products, including wine tasting;
    - Organising -even outside the property of the farm business- recreational, cultural, educational, and sports activities, including hiking and horseback riding, also in agreement with the local authorities, with the aim of developing the territory and its rural resources.
    The agritourism business can be carried out only in pre-existing rural buildings that are not useful to the farm business anymore. Regional financial help is provided in the framework of the Rural Development Plan supported by the European Union.
    Editor: Barbara PANCINO
    © 2009 ASSONEBB




    Alternative Investment Fund Managers Directive.

    ©2012 Editors: House of Lords


    A form of trading in which the decision to trade, its timing or terms (e.g. as to price) are determined by conditions specified in an algorithm. The objective is to enable market participants and investors to respond quickly (normally in an automated manner) to new information or market trends which are relevant for the price of financial instruments. It is a technique that is often used in high-frequency trading (HFT, see below).

    ©2012 Editor: Camera dei Lords


    A process, or set of rules, usually one expressed in algebraic notation, now used especially in computing.
    In the context of financial markets, it takes the form of a mathematical formula which determines trading decisions.

    ©2012 Editor: Camera dei Lords


    The Alternative Investment Market (AIM) is London Stock Exchange’s market for smaller and growing companies. Launched in 1995, AIM serves as a mechanism for companies seeking access to capital to realise their growth and innovation potential in different sectors of the economy. Since its launch in 1995, more than 3,100 companies have joined AIM, mainly because of its specific regulation which facilitates a smooth transition to become a public company; the possibility to rely on a network of advisers that is experienced in supporting companies in this process, and on an international investor base to raise funds. In particular, AIM’s entry criteria respond to the needs of smaller and growing companies: no trading record is required, there is no minimum size criteria and there is no prescribed level of shares to be in public hands. Once admitted to AIM, the company is supported by a network of expert advisers and must work closely with the Nominated Adviser (Nomad). The Nomad's role is to guarantee that the company operations are reasonable for shareholders through the flotation process and during its subsequent time as a public company. There are two sets of rulebooks, the "AIM Rules" issued for companies, and one for Nomads, the AIM Rules for Nominated Advisers.
    Editor: Bianca GIANNINI
    © 2010 ASSONEBB


    The aversion to ambiguity (ambiguity aversion) can be defined as the attitude of individuals to prefer uncertain situations, but of which the probability of risk is known, with respect to completely uncertain situations (ambiguous), of which they are risk percentages are also unknown. This aversion is one of the most studied in Behavioral Finance.
    One of the first scholars to formalize the concept of aversion to ambiguity is Ellsberg (1961), who set up an experiment known as the Ellsberg paradox. He hypothesizes the existence of two urns (urn 1 and urn 2) containing both 100 balls of red or blue color. The urn 1 contained 50 red balls and 50 blue balls, while the urn 2 did not know the exact distribution of the balls. Ellsberg gave a survey to a sample of subjects, who were asked to choose between the following two bets, each of which involves a possible win of 100 based on the color of the ball drawn at random from the corresponding urn:

    a1: when a ball is drawn from the urn 1, 100 $ is received if it is red and 0 $ if it is blue
    a2: extracting a ball from the urn 2, you receive 100 $ if it is red and 0 $ if it is blue

    Second bet
    b1: extracting a ball from the urn 1, you receive 100 $ if it is blue and 0 $ if it is red
    b2: extracting a ball from the urn 2, you receive 100 $ if it is blue and 0 $ if it is red

    Both in the first and in the second case, individuals were asked in which of the two urns they preferred to fish. In both cases, the persons belonging to the sample were shown to prefer urn 1 (so a1 was preferred to a2 and b1 was preferred to b2), of which the percentage of distribution of the balls in the urn was known. This shows an aversion of people towards what is uncertain and whose probability is unknown, compared to an uncertain situation in which the probabilities are known.
    Often the ambiguity aversion arises in the presence of the so-called comparative ignorance (Fox and Tversky 1995), that is when the subject in the decision-making ambit sees his limited competence. For example, in sports, if a football expert finds himself having to choose whether to bet on an automobile event rather than on a football event, he will feel incompetent with respect to the first event and will prefer to bet on the second event. Indeed, bettors always have a preference to bet on the event that is most familiar to them, manifested by their aversion to everything that is uncertain and ambiguous. It is important to distinguish between aversion to risk and aversion to ambiguity: the first derives from a situation in which a probability can be assigned for every possible outcome of an event, the second derives from situations where the probabilities of the results of an event are unknown with the consequent rejection of risk.

    Ellsberg D. (1961). Risk, ambiguity and the Savage Axioms. Quarterly Journal of Economics, Vol. 75, No. 4, pp. 643-669. The MIT Press.
    Fox C., Tversky A. (1995). Ambiguity Aversion and Comparative Ignorance. Quarterly Journal of Economics, 1995, vol. 110, issue 3.

  • AMSTERDAM TREATY (Encyclopedia)

    The Amsterdam Treaty (Treaty), politically agreed on 17 June and signed on 2 October 1997, is the result of two years of discussions and negotiations in a conference of member state government representatives. It entered into force on 1 May 1999, after having been ratified by the fifteen member States of the European Union under their respective constitutional procedures.

    The Treaty on European Union1 specifically required (former Article N) an intergovernmental conference to be convened to review certain provisions. In the first half of 1995, each of the Community institutions prepared a report on the functioning of the Treaty on European Union. A reflection group chaired by Carlos Westendorp, the Spanish Secretary of State for European Affairs, then devoted the second half of the year to an in-depth analysis of the possible options. The group presented its report to the Madrid European Council in December 1995. After consulting the Commission and the European Parliament, whose opinions had to be obtained under Article 48 of the Treaty on European Union before the intergovernmental conference could be launched, the Turin European Council formally opened the negotiations on 29 March 1996, with the goal of creating the necessary political and institutional conditions to allow the Union to meet its future challenges, with particular regard to the evolution of the international situation, to globalization and its effects on employment, to the fight against terrorism and international organized crime, to ecologic imbalances and to risks for public health. The mandate of the intergovernmental conference was extended to issues concerning the functioning of the institutions, such as the composition of the Commission and the weighting of votes in the Council of the European Union. During the negotiations, other themes proposed by Member States and Community institutions were included on the agenda. A series of European Councils in Florence (21-22 June 1996) and Dublin (twice - 5 October and 13-14 December 1996), and an informal Council in Noordwijk (23 May 1997) scrutinized and discussed the various proposals. After fifteen months of work, a consensus emerged on the Amsterdam Treaty, which was signed on 2 October 1997 and entered into force on 1 May 1999.

    Structure of the Treaty

    The Treaty consists of three parts, an annex and thirteen protocols. The Intergovernmental Conference also adopted fifty-one declarations, which are annexed to the Final Act, and noted a further eight declarations by various Member States, which were also annexed to the Final Act.
    The first part covers the substantive amendments and comprises five articles:
    -Article 1, which contains the amendments made to the Treaty on European Union;
    -Article 2, which contains the amendments to the Treaty establishing the European Community2;
    -Article 3, which contains the amendments to the Treaty establishing the European Coal and Steel Community;
    -Article 4, which contains the amendments to the Treaty establishing the European Atomic Energy Community;
    -Article 5, which contains the amendments to the Act annexed to the Council Decision of 20 September 1976 on the election of representatives to the European Parliament by direct universal suffrage.
    The second part of the Treaty (Articles 6 to 11) deals with the simplification of the treaties establishing the three European Communities and their annexes and protocols, with a view to deleting lapsed clauses and adapting the text of certain provisions accordingly. It also provides for the repeal of the Convention of 25 March 1957 on certain institutions common to the European Communities and of the Merger Treaty of 8 April 1965 (Article 9). However, it makes clear that this simplification exercise does not alter the legal effects of the texts or the acts in force adopted on their basis (Article 10). Moreover, the Court of Justice is competent to interpret the provisions of this part of the Treaty (Article 11).
    The third part - Articles 12 to 15 - contains the general and final provisions of the Treaty. Article 12 relates to the renumbering of the provisions of the Treaty on European Union and the Treaty establishing the European Community, Article 13 specifies that the Treaty is concluded for an unlimited period, Article 14 deals with the ratification and entry into force of the Treaty itself, and Article 15 lists the different language versions. The annex to the Treaty contains the tables of equivalence for the renumbering of provisions of the Treaty on European Union and the Treaty establishing the European Community. There are the following protocols:
    -Protocol on Article 17 (ex Article J.7) of the EU Treaty, dealing with the Western European Union and the progressive framing of a common defence policy;
    -Protocol integrating the Schengen acquis into the framework of the European Union;
    -Protocol on the application of certain aspects of Article 14 (ex Article 7a) of the Treaty establishing the European Community to the United Kingdom and to Ireland;
    -Protocol on the position of the United Kingdom and Ireland in relation to the new Title IV of the Treaty establishing the European Community on "visas, asylum, immigration and other policies related to free movement of persons";
    -Protocol on the position of Denmark in relation to the new Title of the Treaty establishing the European Community on "visas, asylum, immigration and other policies related to free movement of persons" and to certain aspects of the common foreign and security policy;
    -Protocol on asylum for nationals of Member States of the European Union;
    -Protocol on the application of the principles of subsidiary and proportionality;
    -Protocol on external relations of the Member States with regard to the crossing of external borders;
    -Protocol on the system of public broadcasting in the Member States;
    -Protocol on protection and welfare of animals ;
    -Protocol on the institutions with the prospect of enlargement;
    -Protocol on the location of the seats of the institutions and of certain bodies and departments of the European Communities and of Europol;
    -Protocol on the role of national Parliaments in the European Union.

    Main provisions

    Freedom, security and justice
    The Treaty introduced guarantees to protect fundamental rights within the European Union, with particular regards to equality between men and women, non-discrimination and data privacy. Clarification was also introduced on the changes concerning freedom of movement within the European Union and the inclusion in the Treaty on the European Community of a new Title IV on visas, asylum, immigration, and other policies linked to the free movement of persons. A new Title VI, dealings with police and judicial cooperation in criminal matters and the conditions for the integration of the Schengen acquis into the legal framework of the European Union, was also added to the Treaty on European Union.

    The Union and the citizens

    The Treaty introduced several innovations in the fields of rights, interests and well being of European citizens, with particular regards to:
    -the development of the concept of European citizenship, with additions to the list of civic rights enjoyed by citizens of the Union and a clarification of the link between national citizenship and European citizenship;
    - the insertion into the Treaty establishing the European Community of a chapter on employment, providing for the development of common strategies for employment and the coordination of national policies;
    - the incorporation into the Treaty establishing the European Community of a stronger social agreement with a commitment to tackle social exclusion and uphold equality between men and women;
    - the consolidation of environmental policy, with emphasis being placed on sustainable development, the consideration of environmental aspects in all sectoral policies and the simplification of Community decision-making;
    - an improvement in the instruments available to the European Union for promoting high standards of public health;
    - the clarification of the aims of consumer protection policy and a better integration of the measures taken in this area with other policies:
    - a guaranteed right of access for each citizen to the documents produced by the European Union institutions and the right to communicate with the institutions in their own language3.

    External policy

    The Treaty introduced improvements aimed at defending the interests of the Union on the international stage. The external policy is both economic and political: as for the first dimension, the scope of the common commercial policy was extended, while the political side concerned the reform of the common foreign and security policy (CFSP). As for the economic issues, the challenges and practicalities of extending the scope of the common commercial policy to include international agreements on services and intellectual property rights were dealt with. As for CFSP, the following reforms were adopted:
    - the creation of a new instrument: the common strategy;
    - an improved decision-making process, through a greater use of qualified majority voting in the Council;
    - the creation of the post of High Representative for the common foreign and security policy to give the CFSP greater prominence and coherence;
    - the establishment of a policy planning and early warning unit to encourage joint analysis of international developments and their consequences;
    - the incorporation of the so called "Petersberg tasks" into Title V (CFSP) of the Treaty on European Union, to demonstrate the Member States' common desire to safeguard security in Europe through operations to provide humanitarian aid and restore peace;
    - the simplification of the procedures for funding the CFSP.

    Institutional questions
    The Treaty introduced institutional reforms related to the enlargement of the Union. The following issues were regulated and updated:
    - the scope and functioning of the co-decision procedure, which strengthens the role of the European Parliament;
    - the weighting of votes in the Council of the European Union and the extension of qualified majority voting;
    - the structure and operation of the European Commission, particularly the number of Commissioners, the Commission's power of initiative and the role of the Commission president;
    - the role of the Court of Justice in areas such as fundamental rights and certain matters closely affecting the internal security of the European Union;
    - an enhanced role for the Court of Auditors, the Economic and Social Committee and the Committee of the Regions;
    - a greater involvement of national Parliaments in the activities of the European Union through a better provision of information;
    - consolidation of the subsidiarity principle through the inclusion of a protocol containing legally binding guidelines;
    - the possibility of closer cooperation between those Member States that want it.

    Subsequent historic developments

    The Nice Treaty
    The reforms introduced by the Treaty were considered to be a step in the process of revision of the treaties made necessary by the enlargement of the Union. The Treaty itself provided for an intergovernmental conference to be started in 2000 in order to review the provisions of the treaties concerning the composition and functioning of the institutions4. The need for the Conference was confirmed by the Cologne European Council of June 1999, which led to opening the Conference on 14 February, with the mandate to draft amendments to the Treaties … in preparation to the enlargement … with regards to the dimension and functioning of the Commission, the weighting of votes in the Council, the extension of qualified majority voting, and enhanced cooperation. The Treaty was signed in Nice on 26 February 2001 and entered into force on 1 February 2003.

    The Lisbon Treaty
    At the entering into force of the Nice Treaty, a further verification of the future of the Union was already foreseen, with the aim of further developing the issues concerning the competences of the Union and of Member States, the Charter of fundamental rights, simplification of the treaties and the role of national parliaments in the European architecture. With the Laeken declaration of December 2001, the European Council specified that the reform would develop through a Convention, in order to prepare an intergovernmental conference. Similarly to the Convention that established the Charter of fundamental rights, the Convention was composed of representatives from national Governments and Parliaments in the Member States and candidate countries and representatives from the European Parliament and the Commission. Its inaugural session was held on 28 February 2002 and work came to an end after 17 months of discussions. The Convention produced a draft Treaty establishing a European Constitution that was presented to the Thessaloniki European Council. The draft Constitution served as the basis for the work of the intergovernmental conference, convened in October 2003. Heads of State and Government signed the draft finalized by the Conference on 29 October 2004. The entering into force of the Constitution was subject to ratification by all Member States, in accordance with each one's constitutional rules. Due to the difficulties encountered in certain States, the Heads of State and Government decided, at the European Council meeting on 16 and 17 June 2005, to launch a period of reflection on the future of Europe.
    At the European Council meeting on 21 and 22 June 2007, European leaders reached a compromise and agreed to convene an intergovernmental conference to draft, instead of a Constitution, a reform treaty for the European Union. The result has been the Treaty of Lisbon, which entered into force on 1 December 2009, after ratification by all 27 Member States, and includes relevant institutional and procedural reforms aimed at conforming the Union to its enlargement to 27 States and preparing it for the current economic and geopolitical challenges.
    1Also known as Maastricht Treaty.
    2The European Economic Community was so renamed pursuant to the Treaty of Maastricht.
    3Emphasis was placed on improving the standard of drafting, so to make legislation easier to understand and apply.
    4This declaration was reported in a specific Protocol on the institutions in the perspective of enlargement. As enlargement was to be implemented in 2001, the conference had to be started in 2000.

    Editor: Lucio LANUCARA

    © 2010 ASSONEB


    Analysts’ forecasts of firms’ earnings and the related forecast errors are issues widely discussed over the huge economic literature. Analysts’ forecasts are considered as a proxy of rational expectation (RE), therefore they are expected to be much more useful than traditional time series forecasts.
    Timeliness of the forecasts and forecast accuracy are an interesting trade-off for those who issue forecasts. They need to choose between releasing forecasts with respect to new information or waiting in order to produce more accurate forecasts in the future by using additional information.
    Information about earning per share can be gained starting from different sources such as proxy statements, quarterly and annual reports, conference calls and other management communications.
    The information produced by analysts is used, among others, by investors in their trading decisions that affect market prices. If capital markets and the analyst forecasting process are efficient, market prices and analysts’ forecasts fully and immediately reflect the processed information. A forecast produced in this way is denoted as follows:

    Where represents the information available at a horizon prior to the realization, and is the conditional expectation operator. Nevertheless, in the span between the forecast and the realization date, new information may arrive on the market, producing inefficiencies that lead to forecast errors. Therefore. the forecast error is the difference between actual earnings and forecast companies’ earnings (per share) and it is defined as:

    Where is the computed relative forecast error for the company i made t months before the release date by analyst j for year T, is the actual earning per share for company i in year T, is the forecasted earning per share for company i by analyst j made for year T with the forecast being made t months before the release date and is the stock price for company i at the end of the previous year, T-1. Technically, there is a scale problem in measuring analysts’ forecasts and forecast errors when data measured in level are used. This problem can persist across firms and over time.
    So a firm with the same total earnings as another, but half as many shares outstanding, will have earnings per share that are twice as large. To adjust for differences in the magnitude of earnings (per share) and forecast errors across firms, it is necessary to divide the forecast error by the stock price. With such an operation, it is assumed that errors in forecasting earnings per share relative to the stock price are relatively homogeneous across firms.
    So far the literature focused on the deviations between earnings and forecasts, which makes it easy to loose sight of how informative the forecasts are about actual earnings. Analysts’ earnings forecasts are quite informative about actual earnings.
    It can happen that a large number of positive/negative forecast errors over time may reflect too low/high forecasts; it can also occur for other reasons. For instance, firms with actual earnings that are smaller than the forecasted earnings may provide analysts with information before the announcement and consequently forecasts can be revised accordingly.
    Forecast errors across firms and analysts are likely to differ for a variety of reasons, one being the likelihood that earnings are more predictable for some industries than others. It is plausible that earnings forecasts in less-volatile industries are smaller. For example, energy prices are subject to large unpredictable price swings, which obviously affect earnings. Although health care prices have risen substantially in recent years, the increases have been relatively persistent and therefore predictable. Health care can be virtually unaffected by recessions, while the demand for energy falls in recessions. Some other industries show low earnings around recessions as well, such as materials and consumer discretionary goods. If recessions are not predicted, there is little reason to think that these decreases in earnings are predictable either.
    More information becomes available as time goes on, and this information is substantial: eleven-twelfths of the year are gone by when the one-month-ahead forecast is made. Firms announce earnings quarterly; when the one-month-ahead forecast is made, earnings for the first three quarters of the year have been announced and are known. Due to this mechanism, as time passes other information becomes available, and consequently the magnitude of forecast errors can be expected to decrease proportionally. Therefore, evidence indicates that analysts’ forecasts on earnings, far from the release date, are higher on average than actual earnings. In other words, whatever earnings an analyst forecasts for a firm, a better prediction is the one showing a somewhat lower level of earnings. This predictable difference is called biased forecast.
    At first glance, it seems obvious that unbiased forecasts are the best forecasts. Yet, there are many conditions in which a biased forecast is the best one. A common criterion for forecast errors is the mean squared error. If a forecaster wants to minimize the expected mean squared forecast error, then an unbiased forecast is the best one. The expected mean squared forecast error applies an increasing penalty to forecasts relatively farther from the average - a forecast twice as far from zero is four times as bad.
    The unbiased forecast - the mean forecast - is not necessarily the best forecast in all circumstances. Suppose that an expert forecaster wants to forecast the value shown when a fair die is thrown. The mean forecast is the average of 1, 2, 3, 4, 5, and 6, which is 3.5. If the forecasted earnings depend on how close the forecast is to the actual value, the best forecast is 3.5 indeed. On the other hand, if the forecaster gets paid only when the value shown by the die is the same as the value forecasted, this unbiased forecast guarantees that the forecaster will be never paid.
    As a matter of fact, the die will never show the value 3.5. If the forecaster is paid only when the forecast is the same as the value thrown, and values from 1 to 6 are equally likely, any integer from 1 to 6 is equally good and 3.5 is never predicted. While this is a simple example, the point is more general. The forecasted value depends on the analyst’s incentives and on the distribution of the data. An unbiased forecast may not be the "best" forecast. There also are objectives similar to minimizing the expected squared error that lead to forecasts being "biased." If a forecaster wants to minimize the expected absolute deviation of the forecast error, then the median is the best forecast.
    The absolute forecast error applies an increasing penalty to forecast errors farther from zero - a forecast error twice as far from zero is twice as bad. The costs of forecast errors increase linearly with the size of the error.
    The forecast that minimizes the expected absolute forecast error is the median, not the mean (or more precisely, the arithmetic average). If the mean and the median are the same, this is a distinction that does not matter. On the other hand, if the distribution is not symmetric, as the earnings distribution is not, the median is a better forecast than the mean if the forecast error’s cost increases linearly with the forecast error.
    The median is the middle forecast, and it divides the forecast into two parts, with half the observations above the median and half below the median. If the median forecast error is noticeably closer to zero than the average forecast error, this indicates that the typical negative (positive) forecast error is larger in magnitude than the typical positive (negative) forecast error. In other words, the distribution of forecast errors is not symmetric. So the consistently negative/positive values of skewness indicate that forecast errors are larger in magnitude than positive/negative errors. The index of skewness indicates how much errors are skewed towards negative/positive values. Finally, kurtosis measures how concentrated a distribution is around the mean as compared to the number of observations in the tails of the distribution. A positive kurtosis value indicates that the tails of the distribution have more observations as compared to the normal distribution.
    Empirical evidence on the distribution of analysts’ earnings forecasts and their relative errors using data on US firms from 1990 to 2004 indicates a substantial asymmetry of earnings, earnings forecasts, and forecast errors. There is also great empirical evidence that earnings forecasted using the expected value and the median a year before the earnings announcement were higher than the actual earnings. Such differences between earnings and forecasted earnings also exist across time periods and industries. In the month before the earnings announcement, the difference between the mean and the median is small. Therefore, one question can be raised: are there predictable differences between analysts’ earnings forecasts and actual earnings?
    Moreover, this empirical evidence suggests that analysts’ forecasts close to the earnings announcement decrease less than the actual earnings. The rationale for this reverse bias is that earnings resulting greater than recent forecasts are interpreted as a positive earnings surprise and consequently the stock price increases.
    Almost the entire existing economic literature on analysts’ forecasts examines whether their forecasts are biased, finding that analysts overestimate earnings. This overestimation decreases as the earnings announcement approaches. Moreover, some research suggests that analysts’ attitude change from overestimating to underestimating just before the earnings announcement. Such near-term forecasts are intended to be helpful to a firm’s management because the announcement of higher-than-forecasted earnings generates favourable publicity and a higher stock price after the announcement. Asking for forecasts that are neither too high nor too low on average seems like a sensible request, especially as compared to asking for an accurate forecast. Even so, it is possible that analysts process the information available to them in the best possible way, but some or all analysts do not get an incentive to produce forecasts that are correct, not even on average. On average, the average of forecast errors declines as the announcement of earnings for the year approaches.
    The theme of the analysts’ incentive has been deeply analyzed in the literature and in particular it has been highlighted the fact that analysts do not make forecasts in isolation. Other analysts make forecasts as well, and the existence of other forecasts can affect an analyst’s forecasts in many ways. Furthermore, the analyst’s ability may change over time by doing forecasts and consequently gaining new experience in forecasting that affect the evolution of their forecasting errors.
    Rather than isolated forecasts, the analysts’ activity may be considered close to a forecasting game in which the smallest forecast error wins (and receives a prize), while everyone else does not receive anything. Such a forecasting game illustrates that an unbiased forecast may not be an analyst’s best forecast, and that the incentive may induce to get only “the closest possible” to the best. If you are not the closest, then it does not matters at all whether your forecast error is almost as good as the best or if it is far away. More generally, any analyst’s forecast will depend on what he or she thinks other people will forecast or what others have already forecasted. A simple example is one in which two people guess someone else’s pick of a number between 0 and 10. The unbiased forecast is 5. Suppose that the first person picks 5. If the second person picks 5, then he or she cannot win, only tie. A pick of either 4 or 6 can increase the expected winnings of the second person if there is no payoff from tying. Neither 4 nor 6 are unbiased, but that does not matter. Either number maximizes the expected winnings, and that is what matters in this game. This suggests that, even if analysts’ forecasts are biased, it is important to consider analysts’ incentives before denouncing them as "irrational" or "ignoring information readily available to them". A lot of factors can explain a nonzero predictable forecast error, for instance an analyst who performs poorly and is at risk of being fired is more likely to make a "bold" forecast that is unlikely to be correct but that will save the analyst’s job if it is correct.
    Ciciretti, R. Bagella, M. Becchetti, L. (2007), "The Earning Forecast Error in the US and European Stock Markets", in The European Journal of Finance, Vol. 13 (2), pp. 105-122, February 2007
    Ciciretti, R. Dwyer Jr., G. P. Hasan, I. (2009), "Investment Analysts’ Earnings Forecasts and Errors: A Summary of the Data", in Review Federal Reserve Bank of St. Louis, 91(5, Part 2), pp. 545-67, September/October 2009
    Clarke, J. Subramanian, A. (2006), "Dynamic Forecasting Behavior by Analysts: Theory and Evidence", in Journal of Financial Economics, Vol. 80, pp. 81-113, April 2006
    Gu, Z. Wu, J. S. (2003), "Earnings Skewness and Analyst Forecast Bias", in Journal of Accounting and Economics, Vol. 35(1), 5-29, April 2003
    Hong, H. Kubik, J. D.(2003), "Analyzing the Analysts: Career Concerns and Biased Earnings Forecasts", in Journal of Finance, Vol. 58, pp. 313-51, February 2003
    Keane, M. P. Runkle, D. E. (1990), "Testing the Rationality of Price Forecasts: New Evidence from Panel Data", in American Economic Review, Vol. 80(4), pp. 714-35, September 1990
    Editor: Rocco CICIRETTI
    © 2010 ASSONEBB


    In Behavioral Finance the anchor represents the tendency of people to form evaluations starting from an initial value (reference point - still) and then making adjustments based on new information. The initial value can be the result of a measurement carried out in the past or formulated and suggested by other subjects able to influence the investors' estimates. This value represents an opportunity for the individual to engage the following values ??and adjustments.
    The anchor is used by those who use technical analysis, ie the study of market price trends over time, in order to predict future trends by using graphical and statistical methods, with reference to trends and past values, that is operators have a strong propensity to use past prices and trends as yet. A demonstration of the anchoring effect was carried out by Kahneman and Tversky (1974).
    In the proposed experiment the interviewed subjects were asked to identify the percentage of African countries in the United Nations, determined by previously running a wheel of fortune and drawing a number between 0 and 100. From the analysis of the answers given it appeared that the subjects had been influenced by the random number extracted from the wheel, as it turned out to be a point of reference for them. For example, the median estimates of the percentage of African countries in the United Nations for the groups that had received 10 and 65 as starting points, turned out to be, respectively, 25 and 45, confirming the fact that the individuals had been influenced by the number drawn randomly. For Kahneman and Tversky the anchorage does not occur only when the starting point is given by the subject, but also when the subject bases his estimate on the result of some incomplete calculation.
    This effect was illustrated through a numerical estimation study. Two groups of high school students have estimated, within 5 seconds, a numerical expression written on the blackboard. The first group of students estimated the following product:
    While the second group estimated the following product:
    To respond quickly to these numerical expressions, the students carried out a few calculation steps and estimated the product by extrapolation or adaptation. Since adaptations are often insufficient, this procedure should lead to an underestimation of the final result. Moreover, since the result of the first multiplication passages (performed from left to right) is greater in the decreasing sequence than the growing one, the first expression should be judged to be greater than the second. Both hypotheses were confirmed, in fact the estimated median for the increasing sequence was 512, while for the decreasing sequence it was 2250. The correct answer is 402030.

    Kahneman D., Tversky A. (1974). Judgement under uncertainty: Heuristics and Biases. Science, 185(4157), 1124-1131.


    The Ancillary Services Market is the venue where Terna S.p.A. procures the resources that it requires for managing, operating, monitoring and controlling the power system (relief of intra-zonal congestions, creation of energy reserve, real-time balancing). In the Ancillary Services Market, Terna acts as a central counterparty and accepted offers/bids are valued at the offered price (pay-as-bid).
    The Ancillary Services Market consists of a scheduling stage (ex-ante Ancillary Services Market) and of the Balancing Market (BM). The BM takes place in multiple sessions, as provided in the dispatching rules.
    The ex-ante Ancillary Services Market takes place in a single session on the day before the day of delivery. The sitting for offer/bid submissions into the ex-ante ASM opens at 3:30 p.m. on the day before the day of delivery and closes at 5:00 p.m. on the day before the day of delivery. The results of the ex-ante ASM are made known by 9:00 p.m. on the day before the day of delivery. In the ex-ante Ancillary Services Market, Terna accepts energy demand bids and supply offers in order to procure reserve, relieve congestions and balance energy injections and withdrawals into/from the grid.
    © 2009 ASSONEBB




    Artificial Intelligence is intelligence of machines, in contrast to the natural intelligence displayed by humans. Technology is a shaping factor in growth of economies; traditional growth theory in economics explained the development basing on the population growth, but human factors and labour skills in globalised economies largely explain the differences in growth rates among countries. The evolution of AI had strong impact on the labour market in the globalised economy; AI crowded out unspecialised workers and low value added firms, by allowing highly technological firms to provide goods and services at a fraction of the price, thanks to automated processes. In 2019 the OECD and G20 countries agreed on AI principles in order to restore confidence, respects human rights and democratic values.

    The digital revolution allows Governments to have access to better data; digitalization allows for greater storage and tracking of information through electronic records, linking of data registries between different parts of government, and enhanced capabilities to handle and analyse large data sets (IMF 2017, p.1). Many countries are already finding that it costs less to collect taxes, deliver public services, administer social programs, and manage public finances. For example, the introduction in Italy in 2019 of the electronic bill allowed the Treasury to collect more than € 2billion euro in less than six months.
    Artificial Intelligence is intelligence of machines, in contrast to the natural intelligence displayed by humans. Artificial intelligence can be classified into three different types of systems: analytical, human-inspired, and humanized artificial intelligence.
    Analytical AI has refers to cognitive intelligence; generating cognitive representation of the world and using learning based on past experience to deliver future decisions. Human-inspired AI refers to cognitive and emotional intelligence; understanding human emotions, in addition to cognitive elements, and considering them in their decision making. Humanized AI has characteristics of all types of competencies (i.e., cognitive, emotional, and social intelligence). Pedro Domingos, professors at the University of Washington, contributed with a book to widespread the basic knowledge and problems in this complex field (The Master Algorithm).
    The traditional problems (or goals) of AI research include reasoning, knowledge representation, planning, learning, natural language processing, perception and the ability to move and manipulate objects (Domingos 2015). General intelligence is among the field's long-term goals. Approaches include statistical methods, computational intelligence, and traditional symbolic AI. Many tools are used in AI, including versions of search and mathematical optimization, artificial neural networks, and methods based on statistics, probability and economics. The AI field draws upon computer science, information engineering, mathematics, psychology, linguistics, philosophy, and many other fields.
    Artificial intelligence allows for precise identification of individuals and their associated activities, to monitor and record biometric characteristics providing a unique, secure, and less-costly alternative to more traditional paper-based official documentation systems. In many developing countries, this technology has allowed governments and citizens the means to study the interconnections of citizens, raising certain problems with respect to privacy of data (Big Data, privacy & state).
    In the private sector, the constant recording of digital information in real time has given rise to a data economy; businesses are already buying and selling these data, and using them in conjunction with artificial intelligence algorithms to better target their advertising efforts and business models (IMF 2017, p. 3).
    Technology is a shaping factor in growth of economies; traditional growth theory in economics explained the development basing on the population growth, but human factors and labour skills in globalised economies largely explain the differences in growth rates among countries. In classic economic theory the growth of the economy is given by capital (K), labour (L) and technology (sigma). Capital is fixed in the short term, and labour depends on population; technology evolves in a non linear fashion and strongly contributes to growth.

    Y = f(K, L, sigma)

    Economic models do not consider the level of capital/labour, but often rely on variation of labour and capital (i.e., the productivity that is given by the variation of capital/labour with respect to production Y).
    The evolution of AI had strong impact on the labour market in the globalised economy; AI crowded out unspecialised workers and low value added firms, by allowing highly technological firms to provide goods and services at a fraction of the price, thanks to automated processes. The Bill & Melinda Gates Foundation (https://www.gatesfoundation.org/) has been among the first to underline the structural risks beyond this evolution, since the AI structurally reduces the demand for labour in Western countries, while tax revenues of States did not compensate the reduced wellbeing and consumption (Digitalisation and Taxation).
    The OECD monitors the evolution of innovation and technology and their impact on labour and capital productivity; details data, reports and statistics are available here https://data.oecd.org/innovation-and-technology.htm). The OECD adopted in May 2019 the Principles on Artificial Intelligence (https://www.oecd.org/going-digital/ai/principles/); they promote artificial intelligence (AI) that is innovative and trustworthy and that respects human rights and democratic values. The OECD AI Principles are the first such principles signed up to by governments. Beyond OECD members, other countries including Argentina, Brazil, Colombia, Costa Rica, Peru and Romania have already adhered to the AI Principles, with further adherents welcomed.
    In June 2019 G20 countries agreed on guiding principles for using artificial intelligence, which are created based on those adopted last month by the 36-member OECD and an additional six countries. The G20 guidelines call for users and developers of AI to be fair and accountable, with transparent decision-making processes and to respect the rule of law and values including privacy, equality, diversity and internationally recognized labor rights. These principles push governments to ensure a fair transition for workers through training programs and access to new job opportunities. It is important to note that China and Russia are among the G20 participants but did not undersigned the OECD principles. The Japanese presidency of the 2019 G20 underlined the need for the free flow of data across borders based on trust (Data Free Flow with Trust … DFFT).

    Domingos Pedro (2015) The Master Algorithm: How the Quest for the Ultimate Learning Machine Will Remake Our World, Penguin, New York.
    G20 (2019) Ministerial Meeting on Trade and Digital Economy, June 8-9, Japan https://g20.org/en/documents/
    International Monetary Fund (IMF) 2017. Digital revolutions in public finance. Edited by Sanjeev Gupta, Washington, DC, ISBN 9781484315224.
    OECD (2019) Principles on AI, May 22, Paris. https://www.oecd.org/going-digital/ai/


    Kemal Dervi, Masahiro Kawai and Domenico Lombardi, eds., Brookings Institution Press and Asian Development Bank 2011 c. 200pp.

    In this collaboration between the Brookings Institution and the Asian Development Bank Institute, eminent international economists examine the increased influence of Asian nations in the governance of global economic affairs, from the changing role of the G-20 to the reform of multilateral organisations such as the International Monetary Fund.
    Established in the aftermath of the Asian financial crisis at the ministerial level, the G-20 has served as a high-level platform for discussing economic analyses and policy responses since 1999. During the current global financial crisis, however, the G-20’s role moved toward that of a global crisis management committee at the leadership level. The challenge now for the G-20 is to succeed in fostering ongoing and increasing cooperation among its members while being supportive of, rather than trying to replace, more universal institutions. After analysing the dynamics of growth in Asia comparatively and historically, the volume appraises the scope for policy coordination among key economies. The contributors analyse financial stability in emerging Asia and then assess the implications of Asia’s increasing role within the newly emerging system of global economic governance, focusing especially on the reform of the international monetary structure.

    Contributors: Dony Alex (ICRIER, New Delhi), Kemal Dervis (Brookings), Hasan Ersel (Sabanci University), Karim Foda (Brookings), Yiping Huang (Peking University), Masahiro Kawai (ADBI), Rajiv Kumar (FICCI, New Delhi), Domenico Lombardi (Oxford University and Brookings), José Antonio Ocampo (Columbia University), Jim O’Neill (Goldman Sachs)

    Link: http://www.brookings.edu/press/Books/2011/asiaandpolicymakingfortheglobaleconomy

    © 2011 ASSONEBB


    The Asia-Pacific Economic Cooperation (APEC) was established in 1989. Asia-Pacific Economic Cooperation, or APEC, is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region. APEC's 21 member Economies are the United States; Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China (PRC); Hong Kong, China; Indonesia; Japan; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Philippines; Russia; Singapore; Republic of Korea; Chinese Taipei; Thailand; and Viet Nam. APEC also assists member economies build the institutional capacity to implement and take advantage of the benefits of trade and investment reform. APEC supports the multilateral trade negotiations underway in the World Trade Organization (WTO), and complements the goals of the G-20 framework for strong, sustainable and balanced growth in the Asia-Pacific Region. APEC members use a consensus-based model: no one in the group is forced to change their policies unless they want to. This means that APEC members rely heavily on the use of "peer pressure" when they want to meet certain self-imposed targets. APEC is formed by Business Advisory Council (ABAC) with the aim of providing advice to the APEC Economic Leaders on ways to achieve goals and other specific business sector priorities, and to provide the business perspective on specific areas of cooperation.

    Editor: Giovanni AVERSA


    The Asian Development Bank (ADB) is an international development finance institution, established in 1966 and constituted of 67 member states, 48 of which are Asian countries, whose mission is to promote economic growth and cooperation in Asia. The Bank has its headquarters in Manila, the Philippines, and operates via the activities and support of its 27 field offices. ADB pursues three complementary strategies – social and economic development of member countries, environmentally sustainable growth and regional integration – with the overall objective of reducing poverty in Asia and the Pacific. The primary tools used to achieve these objectives include loans, technical assistance, direct investment financing and the promotion of a political dialogue between member states. The Asian Development Fund was created in 1973 in order to provide loans with lower than market interest rates as well as credit to those countries with a limited capacity to repay their debts. After the Bank’s reform in 2008, it is pursuing the main goals of economic growth, environmental sustainable development and regional integration.
    Krasner, S. D. (1981), Power Structures and Regional Development Banks, International Organization, Vol. 35, N. 2, pp. 303-328, Cambridge University Press.
    Kappagoda, N. (1995), The Multilateral Development Banks: The Asian Development Bank, The Multilateral Development Banks, Vol. 2, L. Rienner ed.
    Editor: Federica ALFANI
    © 2009 ASSONEBB



    With the general term "Asset Allocation", we mean the operation by which an investment is distributed among different financial sectors (equities, bonds, commodities, cash etc.). The aim of this decision is to diversify the investment in order to achieve an optimal risk/return relationship in line with the client’s profile. With investment funds, the asset allocation determines the very nature of the fund. According to the tables provided by Assogestioni, investment funds can be divided up into five different macro-categories in relation to their " asset allocation basis"1:
    - Equity;
    - Balanced;
    - Bonds;
    - Cash;
    - Flexible.
    Each of the above macro categories is different in the percentage of shares it can hold.
    1See the classification by Assogestioni at WWW.ASSOGESTIONI.IT.

    Editor: Mirko IORI
    © 2009 ASSONEBB


    A category of financial instruments which shares common characteristics (e.g. equities, sovereign bonds, derivatives).

    ©2012 Editor: House of Lords



    In November 2013, the European Central Bank (ECB) and the European Banking Authority (EBA) have agreed on the most significant parameters for the European Banking Union with the analysis of the leading banks balance sheets in the euro zone. The first step for the implementation of European banking project is the Asset Quality Review (AQR) that must be concluded by October 2014. The aim of the ECB is to evaluate the soundness and quality of financial balance sheets of 130 lenders. It is a European transparency initiative, whose main goal is to restore the confidence of international investors in the soundness of the EU financial system. The Asset Quality Review (AQR) includes a general risk assessment of the banks and a Stress Test (ST) in order to check the resilience in case of unfavorable market conditions.

    Asset Quality Review (AQR). The ECB analyzes Balance for 130 Leading European Bank

    In order to fund the real economy and allocate resources, European banks have to solve some domestic and managerial issues. Therefore, the AQR is a necessary step to link the financial sector to the real economy. For this reason, the leading banks of the EU members have started to revise their budgets and strengthen their balance sheets. The national authorities are equipped with suitable structures for monitoring, research and data transmission to the ECB.

    The lending institutions submitted for review will be about 130 (85% of the EU banking system), including 15 Italian banks. According to the ECB, the AQR is a strategic step to stimulate the necessary corrective measures on the balance of European banks.

    The AQR is organized on three levels of analysis as shown in Table 1:

    -Overall risk assessment: quantitative and qualitative supervisory activities (liquidity, leverage, funding sources) currently carried out by national authorities;

    - Asset Quality Review (AQR): a detailed review of loans, securities and financial instruments;

    - Final Stress Test (ST): balance will be subjected to simulated deep recession for their ability to react.

    Table 1: Balance analysis of European banks.

    In this way illiquid assets will be reviewed, together with Contingent Convertible Bond (Coco Bond), sovereign debt and non-performing loans.

    At the end of AQR, the ECB will give its rating on each national bank with the possibility to raise their capital if necessary. Governments will provide the necessary liquidity to prevent speculative attacks on their banks. Therefore, the ECB has provided for the establishment, by the European governments, of a network security with public financial resources to be used in case of necessity (public back stop).


    BANCA D’ITALIA (2014) La recente analisi dei prestiti deteriorati condotta dalla Banca d’Italia: principali caratteristiche e risultati, Banca d’Italia (http://www.ilsole24ore.com/pdf2010/SoleOnLine5/_Oggetti_Correlati/Documenti/Finanza%20e%20Mercati/2013/07/Nota-Provisioni.pdf?uuid=1cf49f18-f87d-11e2-b0d2-9290ada7c4f9)

    EUROPEAN CENTRAL BANK (2014) Asset Quality Review Phase 2 Manual, ECB, March (http://www.ecb.europa.eu/pub/pdf/other/assetqualityreviewphase2manual201403en.pdf?e8cc41ce0e4ee40222cbe148574e4af7)

    EUROPEAN CENTRAL BANK (2013) La BCE da inizio alla valutazione approfondita in vista dell’assunzione delle funzioni di vigilanza, Comunicato stampa BCE, 23 Ottobre (http://www.bancaditalia.it/media/comunicati_bce/com_bce/2013/pr-20131023/PR_2013-10-23-comprehensive-assessment_it.pdf)

    HENRY J. … KOK C. (2013) A macro stress testing framework for assessing systemic risks in the banking sector, ECB Occasional paper series no 152 / October (http://www.ecb.europa.eu/pub/pdf/scpops/ecbocp152.pdf)

    OTTOLINI R. … UBALDI E. (2014) Liquidity Stress Test: da utili a necessari, FinRiskAlert.it (https://www.finriskalert.it/wp-content/pdf/Newsletter-5-2014.pdf)

    QUAGLIARIELLO M. (2013) Dall’analisi della qualità degli attivi allo stress test europeo, Contributi Bancaria n.9 (http://www.bancaria.it/assets/PDF/2013-09.pdf)

    Editor: Giovanni AVERSA


    Generali Group is one of the most significant players in the global insurance and financial products market. The Group is leader in Italy and Assicurazioni Generali, founded in 1831 in Trieste, is the Group's Parent and principal operating Company. ?Indeed, Assicurazioni Generali Austro-Italiche was established in Trieste in 1831. Giovanni Cristoforo Ritter de Zahony became the first chairman of the Company. After his resignation in 1835, the post remained vacant until 1909. In 1848, the company changed its name to Assicurazioni Generali and St. Mark’s lion was adopted as the company symbol. In 1857, Generali shares were quoted for the first time in the Trieste Stock Exchange. In 1875, the company began to pay the dividend in gold Francs (until 1914). In 1881, the 50th Jubilee year was celebrated and Erste Allgemeine, Generali’s first insurance subsidiary, was established in Vienna. A few years later, in 1886, the company’s Central Head Office moved to its present location in Trieste, while the first number of “Il Bollettino” was issued in 1893. At the beginning of the 20th century, a major real estate investment programme was started. In 1906, the 75th anniversary was celebrated, and the share capital was converted into Crowns. Three years later, Marco Besso was appointed chairman. At the end of WW1, Trieste was annexed to Italy and Generali obtained full Italian nationality status, and consequently the share capital was converted into Italian Lire. In 1920, Edgardo Morpugo was appointed chairman. In 1926, the company called the most talented artists, like Marcello Dudovich, to design its posters. The 100th anniversary was celebrated during the world economic and financial crisis begun in 1929, yet in 1933, major investments in farming activities were started. In 1937, an electro-mechanical accounting unit, equipped with state-of-the-art Hollerith calculators was set up. In 1938, Giuseppe Volpi was appointed chairman. After the outbreak of WW2, in 1940 all contacts with the Group’s organisation in enemy countries were interrupted. In 1943, Antonio Cosulich was appointed chairman and two years later, at the end of the war, Trieste was ruled by the Allied military government. In 1945, Generali transferred its Registered Office to Rome. The end of the war brought about the loss of all company assets in Central and Eastern Europe. In 1946, the Italian Republic was born and in 1948 the Group restarted its expansion outside Italy. Mario Abbiate was appointed chairman, followed by Mario Tripcovich in 1953. In 1956, the 125th anniversary was celebrated and Camillo Giussani was appointed chairman, followed in 1960 by Giro Baroncini. In 1966, Generali signed a co-operation agreement with Aetna, the largest U.S. multi-branch insurer. Two years later, Cesare Merzagora was appointed chairman. In 1971, a new, more modern trademark was launched, using the shortened name “Generali”. In 1974, Genagricola was established, and since 1980 it controls all the Group’s farms. In 1979, Enrico Randone was appointed chairman. In 1981, the 150th anniversary was celebrated. In 1984, the first advertising campaign was launched on the mass media. Five years later, Generali initiated a joint venture in Hungary becoming the first insurer from the Western world. A new, modern and complex centre was opened in Mogliano Veneto, which today hosts the head offices of Generali Italy. In 1991, Eugenio Coppola di Canzano was appointed chairman. In 1994, Genertel was established, the first Company selling insurance over the phone. In 1995, Antoine Bernheim became chairman, and in 1996, the first website of the company was created. In 1997, Generali acquired the Migdal group, Israel’s largest insurer. Following an agreement with Allianz and AGF, Generali took over the German group AMB and three French companies, thereby significantly increasing its market share in the two countries. In 1998, following the creation of Banca Generali and the acquisition of BSI, the Group entered the Financial Services sector. Alfonso Desiata became chairman. In 2000, the Italian insurer INA became part of the Group. The following year, Gianfranco Gutty became chairman. In 2002, Generali China Life Ins. Co. was established in Guandzhou, and after just a few years of operation, it became the leader among the insurance companies with foreign equity interests. In the same year, Antoine Bernheim was re-appointed chairman. In 2003, the first Generali Group’s strategic Plan was presented. The bid by CityLife, led by Generali’s real estate arm, won the tender for the redevelopment of the Milan Fair. The Ethical Code was published. In 2005, the first Sustainability Report was presented. In 2006, Generali acquired Toro Group (Italy). A joint venture with Future Group was established in India. In 2007, the 175th anniversary was celebrated and a joint venture with PPF Group was established to promote business in Central and Eastern Europe. In 2008, the joint venture between Generali and PPF Group became operational with activities in thirteen Central and Eastern Europe countries. In 2009, Toro merged with Alleanza. In 2010, Cesare Geronzi was appointed chairman, followed by Gabriele Galateri di Genola in 2011.

    Since 1831, Generali Group has been characterised by a strong international drive. It is a key player in Continental Europe, the biggest life insurer and leader in direct channels, with a significant presence in all main countries. It ranks 1st in Italy and 2nd in Germany and France. It adopts a multi-brand and multi-local approach, and it implements a multi-channel distribution strategy.
    Generali Group, with its experience dating back to almost two centuries, its recognised financial strength and its consolidated partnerships with major international insurers, operates in all classes of insurance. The lines of business in fact range from mass risks (like automobile third party liability and personal injuries) to highly complex industrial plants, from simple policies for family protection to extensive contracts satisfying multinational companies’ complex needs. With its capacity to easily adapt to all market changes, Generali has often been the driving force behind innovation in the industry: one example is certainly Europ Assistance, based in Paris, world leader in the assistance sector, or, in Italy, Genertel, specialised in direct selling over the phone and via web.
    In the last few years, however, even if adopting a business diversification strategy, Generali has been focusing on providing coverage to individuals, protecting their incomes and optimizing their savings, mainly through life products, with individual and group pension plans. In this field, Generali can offer highly sophisticated solutions to multinational companies through a specialised structure, named GEB (Generali Employee Benefits) located in Bruxelles. Moreover, Generali has recently widened its traditional insurance business focus to the financial and asset management services. Along this strategic evolution, it was decided to complement the available products range by setting up an internal banking structure, Banca Generali. At the same time, the Group has started to optimize the products performance for the benefit of savers, and has begun to concentrate the activities of asset management in a few specialised companies, linked in a single European network.
    Generali is today present in more than 60 countries, with over 500 international companies, over 82,000 employees, and 65 millions clients worldwide. The Group's own sales network employs more than 100,000 people, more than 460 billion worth of assets, and it has a property portfolio worth € 28 billion.

    Links: www.generali.com


    Association of Southeast Asian Nations (ASEAN) is a regional inter-governmental organization to promote regional peace and security and to accelerate economic growth, social progress and cultural development. It was founded by Indonesia, Malaysia, the Philippines, Singapore and Thailand on August 8, 1967, and was later joined by Brunei (1984), Vietnam (1995), Burma and Laos (1997) and Cambodia (1999). After the East Asian Financial Crisis of 1997, leaders of each country felt the need to further integrate the region. Beginning in 1997, the bloc began creating organisations within its framework with the intention of achieving this goal. “ASEAN Plus Three” was the first of these and was created to improve existing ties with the People's Republic of China, Japan, and South Korea. This was followed by the even larger East Asia Summit, which now includes these countries as well as India, Australia, New Zealand, United States and Russia. This new grouping acted as a prerequisite for the planned East Asia Community. Furthermore, In 1992, the ASEAN Heads of State and Government declared that ASEAN should intensify its external dialogues in political and security matters as a means of building cooperative ties with States in the Asia Pacific region. Two years later, the ASEAN Regional Forum (ARF) was established. The current participants in the ARF are as follows: all the ASEAN members, Australia, Bangladesh, Canada, the People's Republic of China, the European Union, India, Japan, North Korea, South Korea, Mongolia, New Zealand, Pakistan, Papua New Guinea, Russia, East Timor, United States and Sri Lanka.

    Editor: Giovanni AVERSA


    Preferences are asymmetric if there is no pair x and y, taken from X, such that the condition x>y and y>x is satisfied.

    X represents a set of objects, as a space of consumption bundles, modeled as a subset of R^K. R is the real line and K is the number of commodities (example K=3 apples, oranges, pears). A typical consumption bundle is a three-vector x = (x1, x2, x3) with x1, x2, x3 giving the amount in kilos of the commodities. We take a second vector from the set X, y = (y1, y2, y3) with y1, y2, y3 giving the amount in kilos of the commodities.

  • AUCTION (Encyclopedia)

    An auction is the process of buying and selling in which the auctioneer declares the rules before the auction begins and all participants accept them. The auction is posted through the filing of bids and it results in the sale of an asset to the best legitimate bidder (the value of a good is defined through an auction process).
    Thus, the auction process facilitates the determination of a system of resource allocation and of a price that must correspond to the benefit of enjoying a good, and /or of receiving a service, and /or of acquiring a right. Different types of goods, contracts, licenses, and fees are covered through different auction processes.
    Auction procedures are performed daily by Monetary Authorities that propose periodical auctions to sell securities and debt certificates; by regulated markets (stock exchanges) that operate through a mechanism defined as "double auction" (in which reaching the price that allows the exchange competition is allowed both on the ask and on the bid side); by public institutions that use the auction mechanism to award exclusive contracts in the exploitation of common resources and rights with the purpose of allowing more agents to compete in order to secure access to one or more scarce resources, thus achieving an efficient allocation.
    1. Competitive bidding: it is an auction based on the competition of participants to win the subject of the auction by proposing the greatest upside or the minimal downside. As part of a competitive bidding, it is possible to identify different typologies of auctions: according to participants (the auction can be open to all or only to persons with special requirements) or based on procedures (i.e. the English auction which is characterised by the auctioneer who proposes a low base as a start for the subject of the auction, thus to achieve the subject it is required to increase the bid price with minimum increments; the Dutch auction which is based on lowering the bid; auctions based on written bids in sealed envelopes; and outcry auctions with open bids observable by all participants).
    2. Dutch Auction: according to this methodology, the auctioneer does not propose an initial base to obtain the asset, but the base is set high and it is reduced until an offer matching the price requested by the auctioneer is made.
    3. Outcry auction: it is the typical modality of sale of securities that was carried out in the stock exchanges before the introduction of electronic trading systems. In the stock exchanges, during outcry auctions, securities were sold and bought by shouting the name, price and quantity of the title to be sold and/or bought.
    4. Foreclosure Auction: it is carried out after the bankruptcy of a company in order to satisfy the creditors of the bankrupt. A court orders this type of auction.
    5. Judiciary Auction: it takes place when a court orders it and it is carried out through a mandatory sale of some assets in order to satisfy the creditors. It can be an English-type auction or an auction with tenders in sealed envelopes.
    Parisio L. (1999). "Meccanismi d'asta". Roma, Carocci.
    Editor: Alberto Maria SORRENTINO
    © 2009 ASSONEBB



    Australia is a federal constitutional monarchy as well as the independent state of the Commonwealth, rich in natural resources and characterized by a high economic dynamism. From twenty-three, in fact, the country growth rates above the average of OECD countries. The soundness of its economy, the twelfth in the world, has been confirmed by the limited effects of the global financial crisis, because, unlike the leading advanced economies, Australia has maintained a positive growth rate during the period of the crisis. In addition to the economic, the country has also achieved several successes in the social and geopolitical areas that have consistently increased its international appeal over the last fifteen years. According to the Human Development Index (HDI) of the United Nations, Australia is also the country with the highest quality of life together with Norway.

    Since 1991, continued growth: Strengths of the Australian economy

    Latest data on Australian GDP confirmed a positive trend that continues since 1991. Unlike to which occurred in the leading advanced countries, Australia, thanks to the increasing integration with the emerging Asian economies (see also BRICS), maintained a rate of economic growth to be positive during and after the global crisis without entering in recession. Recent data provided by the Australian Bureau of Statistics (ABS) on the overall health of the Australian economy show that the average growth in recent years was 3% (as shown in Table 1).

    Tab. 1: Key Economic Indicators

    Source: Australian Bureau of Statistics, Economist Intelligence Unit

    Overall, the fundamental strengths of Australia, can be considered as the rich supply of natural resources, a financial and banking system robust and competitive (the banking system is dominated by four major commercial banks, called "big four") and an efficient public administration. To confirm what has just been described, according to a recent report by the World Bank and the International Finance Cortporation (IFC), the "Doing Business 2015", Australia is among the best countries to do business in the world, ranking for two consecutive years in 10th place on 189 economies, for ease of access to credit, for the time of company registration, for customs procedures and disputes solutions (as shown in Table 2).

    Tab. 2: Top 10 Economies “Doing Business” 2015/2014

    Source: World Bank Group

    The growth in investment, confirms the data of the report "Doing Business 2015" and the consolidation of Australia's reputation as an important destination for doing business. The reasons that improve this reputation are a flexible and skilled workforce, which, together with a good administrative system, its proximity to Asian markets (Australia is at the center of the Asia-Pacific region, the area with the most high rates of economic growth in the world) have made Australia a perfect destination for the headquarters of many companies and corporations. Finally, according to the UNCTAD World Investment Report 2014, Australia was confirmed in 2013, for the third consecutive year among the top 10 destinations for foreign direct investment (FDI).

    In conclusion, the factors that characterize the good health of the Australian economy can be summarized as follows:
    - Steady GDP growth;
    - Rich natural resources (world leader in the mining industry, Australia holds the world's largest resources of lead, nickel, uranium and zinc, as well as leading exporter of carbon and iron materials);
    - Favourable geo-economic and geo-political location (Australia is one of the leading players in the Asia-Pacific region, an area of greater economic growth in the medium to long-term and growing political and strategic importance);
    - International trade and free trade agreements (Ancerta,
    ASEAN, Trans Pacific Partnership, WTO);
    - Labour productivity;
    - Good level of household consumption;
    - Efficient public administration;
    - Solid financial and banking system (according to Global Finance, in 2012 the four major Australian banks were part of the 50 safest banks in the world)

    Weakness of Australian System

    Not only strengths, the Australian economy is also characterized by a number of risks that can slow down the performance of the country. The main issues concern the excessive cost of labor, the high private debt, the dependence on exports of minerals and gas and the potential bubble in the housing market.

    Australia is the leading supplier of minerals needed for the growth of Asian countries and its economy is closely linked to the performance of economies such as China, Japan, Indonesia and India. One of their slowdown, together with a decrease in international prices of Australian raw materials could cause an increase in the trade deficit and a slowdown in economic growth.

    From the recent analysis of the OECD and the International Monetary Fund (IMF) also show that the excessive cost of the work is likely to be a potential issue for an economy such as Australia. According to the two institutions, high labor costs are a burden for businesses and can be sustainable only in the case of a “booming” economy and relatively closed to strong foreign competition.


    FIANO A. (2012) World’s 50 safest banks 2012, Global Finance (http://www.gfmag.com/awards-rankings/best-banks-and-financial-rankings/worlds-50-safest-banks-april-2012#axzz1ou8MG8s2)

    INFOMERCATIESTERI.IT, http://www.infomercatiesteri.it/public/rapporti/r_119_australia.pdf

    JERICHO G. (2014) Six facts that show the health of Australia’s economy, The Guardian, June (http://www.theguardian.com/business/grogonomics/2014/jun/05/six-facts-that-show-the-health-of-australias-economy)

    MINISTERO DEGLI AFFARI ESTERI, Australia, Rapporto congiunto Ambasciate/Consolati/ENIT 2015

    OECD (2014), Australia Economic forecast summary, OECD Report (http://www.oecd.org/eco/outlook/australiaeconomicforecastsummary.htm)

    UNDP, Human development index 2014, UNDP Report (http://hdr.undp.org/sites/default/files/hdr14-report-en-1.pdf)

    WORLD BANK GROUP, Australia Doing Business 2015, World Group Flagship Report (http://www.doingbusiness.org/~/media/giawb/doing%20business/documents/profiles/country/AUS.pdf)

    Editor: Giovanni AVERSA

  • Auto financing strategy

    It is a portfolio management strategy, where the adjustment is achieved without new capital (in or out) in each period.


    An automated teller machine (ATM) is an electronic telecommunications device that enables customers of financial institutions (BANKS) to perform financial transactions, such as cash withdrawals, deposits, transfer funds, or obtaining banks's account information, at any time and without the need for direct interaction with bank staff.


    Oltre alla capacità di determinare esso stesso le regole particolari del proprio agire (v. autonomia) e alla capacità di agire nel proprio interesse modificando unilateralmente le posizioni giuridiche dei cittadini (autarchia), l’ente pubblico dispone anche della capacità di risolvere da sé, secondo il diritto e con i mezzi amministrativi a sua disposizione, i conflitti attuali o virtuali con altri soggetti nell’ambito dei rapporti di diritto pubblico. Rimane salvo comunque il sindacato giurisdizionale innanzi alla magistratura ordinaria e amministrativa ex art. 113 Cost. L’esercizio dei poteri di autotutela costituisce attività secondaria rispetto all’attività di amministrazione attiva (intesa come emanazione di atti amministrativi) in quanto strumentale per consentire agli atti deliberati dagli enti dotati di autonomia di dispiegare regolarmente la loro efficacia. L’esercizio dell’autotutela dà luogo a provvedimenti definiti come decisioni, in quanto permettono di pronunciarsi su di un conflitto tra Pubblica Amministrazione e destinatario del provvedimento. Quando l’Amministrazione esercita la capacità di autotutela spontanea e decide su propri provvedimenti agendo d’ufficio, in presenza di un concreto interesse pubblico alla modifica di un atto od all’eliminazione di un vizio dello stesso, le decisioni prendono il nome di annullamento (per motivi di legittimità con effetto ex tunc), revoca (per motivi di merito con effetto ex tunc, salvi i diritti consolidati), abrogazione (per motivi di legittimità sopravvenuti con effetti ex nunc) e caducazione (per motivi di opportunità sopravvenuti con effetto ex nunc). Fanno parte, invece, delle decisioni di autotutela necessaria gli atti approvativi (omologazione, visti ecc.) e gli atti sostitutivi (in via surrogata nei confronti degli organi inadempienti). Gli atti di autotutela contenziosa costituiscono, infine, l’ultima categoria di decisioni. Quest’ultima riveste una importanza notevole in quanto comprende tutta quella attività sollecitata da un terzo interessato all’attuazione del precetto, terzo al quale l’ordinamento giuridico riconosce un diritto ad ottenere la decisione. Da un lato vi è dunque il diritto di ottenere la decisione, dall’altro il dovere di renderla. I mezzi con cui si esplica l’autotutela contenziosa sono i ricorsi, e precisamente il ricorso in opposizione, ricorso gerarchico proprio e improprio, ricorso straordinario al Presidente della Repubblica (v. giustizia amministrativa). La ricostruzione dell’istituto dell’autotutela è quasi esclusivamente un prodotto dell’elaborazione della dottrina. In proposito va tuttavia segnalato, in specie in relazione al dibattito che esso ha suscitato, il c.d. disegno di legge Cerulli-Irelli (XIII Legislatura n. 4860, approvato dalla Camera dei Deputati il 25 ottobre 2000) il quale, per quanto qui interessa, ha proposto la codificazione di alcuni importanti principi in tema di autotutela. Così l’art. 9 dopo avere illustrato una nuova disciplina della annullabilità (v. vizi di legittimità e di merito) dispone ai commi 4 e seguenti: “resta salva la facoltà di regolarizzazione, anche in pendenza di ricorso giurisdizionale. All’annullamento del provvedimento amministrativo può provvedere d’ufficio, per motivi di interesse pubblico, l’organo che lo ha emanato ovvero altro organo previsto dalla legge, salva convalida ovvero conversione dello stesso, laddove ne ricorrono i presupposti. La retroattività dell’annullamento si estende agli atti successivi a quello annullato legati ad esso da un diretto rapporto di causalità”.

Selected letter: A English version

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