Fabio Panetta, Governor of the Bank of Italy, in a strong speech at the Assiom Forex congress in Venice, assessed that Donald Trump's trade war has not halted global trade but is ricocheting to hit the United States itself. While the global economy shows unexpected resilience, Panetta warns of progressing market fragmentation and appeals to Europe for urgent investment in artificial intelligence and the integration of capital markets to avoid marginalization.

Failure of US Tariff Policy

Global trade has not slowed despite tariffs imposed by Trump; costs are borne mainly by American consumers and companies.

Call for Investment in AI

Italy and Europe must accelerate the implementation of digital technologies to not lose ground to the USA and China.

Stability of Italian Banks

The banking sector remains strong, but excessive caution in lending could hamper innovative entrepreneurship.

Criticism of Judicial Reform

Elly Schlein questions the purpose of constitutional changes, claiming they serve to protect power, not citizens.

During the 32nd Assiom Forex congress in Venice, Bank of Italy Governor Fabio Panetta presented an in-depth analysis of the current geopolitical situation and its impact on financial markets. According to the head of the Italian central bank, the protectionist tariff policy of the US administration has not achieved its intended goal of drastically slowing globalization. Panetta noted that international trade has not shrunk but has changed its routes, and the highest price for the introduced customs tariffs is currently being paid by the American economy. He simultaneously emphasized that companies from other countries, including China, have adapted to the new reality by lowering prices and seeking alternative sales markets. In 2024, trade relations between the USA and the European Union entered a phase of the greatest tension in decades, forcing central banks to revise forecasts regarding the stability of supply chains. The governor drew attention to the necessity of building a new multilateralism, warning that Europe cannot remain passive in the face of great power rivalry. According to Panetta, a key element of the Old Continent's defensive strategy should be the rapid adaptation of artificial intelligence (AI) and the completion of building a capital markets union. Panetta also pointed to the solid condition of the Italian banking sector, while appealing to financial institutions not to let their focus on risk turn into excessive caution that could stifle innovative entrepreneurial projects. Regarding monetary policy, he declared flexibility on interest rates, monitoring inflationary risks stemming from commodity markets. „L'onere dei dazi finora è ricaduto soprattutto sull'economia statunitense.” (The burden of the tariffs has so far fallen mainly on the US economy.) — Fabio Panetta Regarding Italy's internal situation, Panetta noted that while the country has been growing at a rate close to the EU average for five years, the model based on low wages and extensive employment growth is unsustainable in the long term due to unfavorable demographic trends. He advocates shifting the focus to productivity growth through digitalization and investment in human capital. Simultaneously, on the Italian political scene, opposition Democratic Party leader Elly Schlein sharply criticized the government's judicial reform, accusing it of limiting judicial independence and lacking real impact on speeding up court procedures for citizens. 0.7% — was Italy's GDP growth last year GDP Growth in Selected Periods: Average 2010-2019: 0.2, 2023: 0.7, 2024: 0.8, 2025: 0.7

Mentioned People

  • Fabio Panetta — Governor of the Bank of Italy (Bankitalia), former member of the ECB Executive Board.
  • Elly Schlein — Leader of the Italian Democratic Party, critic of the Meloni government's reforms.