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This newsletter is a twice‐yearly publication intended to inform readersregularly about international technical cooperationatBancad’Italia, es‐peciallyseminarsandworkshops.

Bancad’Italia is engaged in technical cooperation activities (i.e. seminarsand workshops, bilateral staff training and institution building) tostrengthen the institutional capabilities of the bene iciaries. The bene iciaryinstitutionsaregenerallyinnewEUmemberstatesthathavenotyetadoptedthe euro, EU candidate and potential candidate countries, Mediterraneancountries, Eastern European and Caucasian countries within the EuropeanNeighbourhoodPolicyarea,BRICSandotheremergingcountries.

The areas of cooperation relate to the Bank’s institutional functions(central banking including market operations, payment systems andtreasuryservices,economicresearchandstatistics,bankingand inancialsu‐pervision,andcurrencycirculation)andsomesupportactivities(IT, internalauditing,controls).

Furtherdetailsonhttps://www.bancaditalia.it/compiti/ricerca‐economica/cooperazione‐tecnica‐internazionale/index.html

Contents

INTERNATIONALTECHNICALCOOPERATION

Highlights

NUMBER10JULY2018

2018(1stSemester)

Ouractivitiesforthefirsthalfoftheyearencompassedthreeworkshops,twoseminars,sevenstudyvisitsinRome(oneofwhichfinancedbytheEuropeanCommission through TAIEX funds), five videoconferences, one internship andeight written consultations. In total, 127 experts from National Central BanksfromallovertheworldjoinedusinRometotakepartinouractivities.More detailed information on the activities carried out in the first semester of2018isavailableinside.

2018(1stSemester)Highlights 1Seminars&Workshops 22018Activities−SnippetsofInformation 32018ForthcomingSeminars&Workshops 52019Seminar&WorkshopCataloguePreview 6GeneralInformation 7Contacts 7

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Workshopon‘Integratingthekeyvariablesin a changing organization: approachesandtools’(Rome,15‐16February2018)Participants:17Centralbanksmaydiffersigni icantly–inthescope and nature of their functions, in theirhistoryandinthepoliticalandeconomiccon‐ditionsinwhichtheyoperate,andinthechal‐lengestheyface–buttheyareallcomplexor‐ganizationswhicharesubjecttoseverepublicscrutiny.Theycanin luencetheexternalenvi‐ronment,makingchangehappen,buttheyalsohavetorespondrapidlytochangesinit:regu‐latory changes, stakeholders’ growing expec‐tations in terms of accountability and trans‐parency, theneed tobemoreproductiveandef icient, and the evolution of technology.Theirstaffdemographicsareevolving,andsoaretheiremployees’expectationsandneeds.[Readmoreonpage8]

Workshop on ‘Banknote circulation, thecash cycleandBancad’Italia’smonitoringofprofessionalcashhandlers’(Rome,1‐2March2018)Participants:19The main objective of the workshop was tohighlightdevelopments in the Italiancashcy‐cle,provideparticipantswiththemostrecentupdatesonthecashhandlers’ regulation,anddescribethelessonslearntthroughanexperi‐ence in themonitoring activity that has beenlastingforsixyears.Theprogrammewasrichandvaried.The workshop was opened by the DirectorGeneralforCurrencyCirculationandAccount‐ing,whorecalledthemainfeaturesoftheItal‐ian cash cycle, such as themajor role playedby professional cash handlers (banks andCITs) in cash recirculation, the progressachievedbyBancad’Italia over time, and thechallengesahead.[Readmoreonpage8]

Workshop on ‘Supervisory activities: ITtoolsfordatamanagement’(Rome,12‐13April2018)Participants:17As the newcomer of the year, this workshopfocusedonsomekeydatamanagementtopicsfor supervisory authorities. In recent years,the data managed by these authorities havegrowndramatically;asaconsequence, super‐visors face different, but nevertheless chal‐lenging, issues compared with the past. Thisworkshop clearly showed that inding therightmethodologiesandprocesses(aswellastheITtools)toturnthesedataintousablein‐formation becomes ever more crucial. Theworkshopprovidedinformationaboutthedif‐ferentdatamanagementsolutionsimplement‐edbyBancad’Italia and theotherparticipat‐ing institutions.These include thedataware‐houseaswellasreportinganddocumentman‐agementtools.[Readmoreonpage9]

Seminar on ‘Cybersecurity challenges forcentralbanks’(Rome,16‐18May2018)Participants:27In thepast fewyears, cybersecurityhasmor‐phedfromalittle‐knownspecialistsubjecttoaglobalpriority.Advancedandemergingecon‐omiesalikeareincreasinglydependentondig‐ital data and the networks that carry them;connecteddevices, frommobilephonestore‐motely controlled temperature sensors, havebecomeubiquitousandessentialtomanypro‐duction and consumption activities. A varietyof actors, includingbutnot limited tonation‐states,criminals,andactivistgroups,arecon‐stantly scanning cyberspace in search of vul‐nerabilities that can be exploited for politicalor economic gain. Government institutionsand private companies need to develop theability to stop such attempts and, in case offailure,atleastcontaintheadverseeffects.[Readmoreonpage10]

Seminars&Workshops

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2018Activities−SnippetsofInformation...

ThemainfocuswasputonCentralBankGovernance(inparticu‐lar,OrganizationandFunctions,HumanResourcesManagement,and Accounting) and on Supervision and Financial Stability.Technical Issues, especially Information Technology, also ac‐countedforasigni icantpartoftheactivities.

Mainlyaspartofthefollow‐uptoseminarsandworkshops,Ban‐cad’Italiaanswereda largenumberofwrittenrequests for in‐formation. Study visits in Rome also represented a signi icantshareoftheactivities.Inaddition,videoconferencescontinuetobehighlyappreciated,bothbyattendeesandBancad’Italia;theycaneffectivelyreplacestudyvisitsinsomecircumstances.

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…2018Activities−SnippetsofInformation...

MostoftheparticipantscamefromTurkey,UkraineandKazakhstan.

In contrast to recentdevelopments,maleparticipationwashigherthanfemaleparticipation.

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2018

Workshopon ‘Sample surveys in centralbanking’

(Rome,8‐9October2018)

Centralbanksconductperiodicalsamplesur‐veysonhouseholds,businessesandselectedintermediaries to 1) compile aggregate sta‐tistics and 2) periodically collect cross‐sectional informationwhich allows them toexamineeconomicagents’heterogeneityandthe distributional effects of shocks, policiesand institutional changes.Althoughnationalstatisticalinstitutesareinchargeofdatacol‐lection and sample surveys, the need fortimely and speci ic information to be usedfor monetary policy purposes calls for sur‐veysdirectlymanagedbycentralbanks.TheworkshopreviewsBancad’Italia’slongexpe‐rience with sample surveys and highlightsthe critical issues arising in practice: ques‐tionnaire design, sample selection andweighting, treatmentofnon‐responses,dataimputation,analysisandpublication.

Seminar on ‘The post‐trading phase ofmonetary policy and investment opera‐tions’

(Rome,12‐14November2018)

Theseminarfocusesonabroadrangeofac‐tivities related to the back‐of ice functionand aims at sharing best practices in thepost‐tradingphaseofcentralbankmonetarypolicy operations and investment transac‐tions. The settlement process for differentinancial instruments is thoroughly exam‐ined, aswell as issues related toaccountingandtotherelationshipwithcustodians.Spe‐ci ic sessions are dedicated to securitieslending and collateral management and tothe treatment of futures and interest rateswaps,aswellastherelatedclearingissues.Finally, a speci ic session is devoted to ITplatformssupportingthefront‐,middle‐andback‐of ice functions. The importance of a

proper management of operational riskthroughout the entire lifecycle of centralbanks’ inancial transactions is a pivotalthemeofthewholeseminar.

Seminaron’Paymentsystemsandmarketinfrastructures in the EU; policy, opera‐tion, oversight. Banca d’Italia’s experi‐ence’

(Rome,12‐14December2018)

The seminar aims to deepen participants’knowledgeofEUpaymentsystemsandmar‐ket infrastructures fromapolicy,operation‐al, technical and oversight point of view;Bancad’Italia’sexperiencefromthesediffer‐entperspectivesispresented.Thefollowingtopicsarecovered:theroleofthe ESCB in payment and securities settle‐mentsystems;theTARGET2large‐valuepay‐ment systemand theT2S (business and IT)securities clearing and settlement system;central banks’ collateral management andthemobilization of marketable collateral inEurosystem credit operations (the Eurosys‐tem Collateral Management System, ECMS);the post‐SEPA (Single Euro PaymentsArea)landscape−interoperabilityandreachabilityin European retail payments and in Bancad’Italia’s retail payment services; new Eu‐rosystemservicesinthe ieldofinstantpay‐ments,TIPS(businessandIT);businessrela‐tionshipswiththenationalbankingcommu‐nity; services offered to non‐EU centralbanks and international institutions; recentdevelopments in the regulatory framework,at EU and international level; and Bancad’Italia’sroleintheoversightofsystemicallyimportantpaymentsystemsaswellasretailsystemsandservices.Presentationsarecomplementedbyavisittothe Service Desk of the TARGET2 and T2SEurosystemMarketInfrastructures,whichisjointly operated by Banca d’Italia andDeutscheBundesbank.

ForthcomingSeminars&Workshop

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2019Seminar&WorkshopCataloguePreview

Workshopon ‘EurobanknoteproductionatBancad’Italia–outstandingfeatures’

(Rome,18‐19February2019)

Seminaron‘Auditactivitiesinacentralbank‘

(Rome,April2019,datetobedecided)

Seminaron‘Centralbankscommunication’

(Rome,9‐11September2019)

Seminaron‘Portfoliomanagementinacentralbank’

(Rome,2‐4October,2019)

Workshopon‘Customerprotectioninthebankingsector–theroleofBancad’Italia’

(Rome,4‐5November2019)

Workshop on ‘Reconciling inancial intermediaries’ re‐portingburdenandregulators’informationneeds:PUMA2‐theItaliancooperativeapproach’

(Rome,9‐10December2019)

Thede initive2019seminarandwork‐shopcatalogueandmoredetailedinfor‐mationwillbepubli‐shedsoononBancad’Italia’swebsite

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Participation in the seminars and work‐shopsisbyinvitation.Requests from institutions other than theregular bene iciaries are considered on acase‐by‐casebasis.TheworkinglanguageisEnglish.Participa‐tionisfreeofcharge.Insomecaseshotelaccommodationispro‐videdbyBancad’Italia.Travelexpenses toand fromRomearenotreimbursed.

Seminars usually last 3 days; workshopslast2daysatthemost.Lunches are provided for the duration ofthe seminar/workshop. A courtesy dinnerisalsooffered.We usually accept only one representativefromeachinstitution.Our seminars andworkshops are as inter‐active as possible. Occasionally, selectedparticipants are invited to deliver shortpresentations inorder to stimulatediscus‐sionanddebate.

GeneralInformation

Contacts

InternationalTechnicalCooperationandEUNeighbouringEconomiesDivision

InternationalRelationsandEconomicsDirectorate

DirectorateGeneralforEconomics,StatisticsandResearch

Bancad’Italia

ViaNazionale,91

00184Roma

Italy

https://www.bancaditalia.it

Tel.+390647921

Fax+390647922681

E‐mail:bdi.cooperation@bancaditalia.it

Bancad’Italia’sconferencecentre‘CarloAzeglioCiampi’

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(Workshopon‘Integratingthekeyvariablesina changing organization: approaches andtools’, continued from page 2) The workshoptried to provide some possible answers to thequestionofhowtobuildsynergiesbetweenfunc‐tionssuchasHumanResources,OrganizationandInformation Technology in order to accomplishtheambitiousanddemandingtaskofhelpingcen‐tralbankstomaketheleapandguaranteeorgani‐zationaleffectivenessinpursuingtheirobjectives.Inadayandahalfdensewithpresentationsandteamwork, 35 among participants and speakersengagedinlivelydebate.Experiencesandchallengesweresharedontopicssuchas:howtodesign,assessandimproveanor‐ganization and its strategy, the action taken forprocessimprovement,thedevelopmentofaman‐agement dashboard, rulemaking, and the use oftechnologyasapillartosupportsmarterworking.TheevolvingroleoftheHRfunctionaspartoftheradical change taking place in all managementsystemswasalsodiscussed.Thebroaderconceptof organizational well‐being provided a frame‐work for topics such as work‐related stress andchanges in culture, behaviour, and the role ofmanagers.Bancad’Italia shared its ownmethodologies andtools and presented the progress made and thechallenges ahead. Participants were called uponto take part in a case study on how to strike aneffective balancebetween the enabling functionsand thebusiness functions, a taskwithno singleanswer,butrathermanypossiblescenarios.In a dedicated session, the participant from theNational Bank of Ethiopia spoke about howchanges are introduced and managed in his or‐ganization.Duringtheworkshopmanyquestionsarose:whatarethemainpitfallsofstrategicplanning?Howtosetthesizelimitofanorganizationalunit?Howtomotivate and develop human resources? Is theoverallperformanceofacentralbankcheckedbyexternalstakeholders?Howtostimulatestaffmo‐bility? What information should a managementdashboard contain? How to combine swift com‐municationandsecurity?Theclassickeyorganizationalvariablesweread‐dressed,highlightingtheimportanceofsynergiesbetween them and also exploring the combinedroletheyplayinthedevelopmentofnewconcepts

andtrends,suchassmartworkingandorganiza‐tionalwell‐being.The new work environment is characterized bylexibility and technological developments thatmake itpossibletoovercomethetimeandspacebarriersofthetraditionalworkmodels:taskscanbecarriedoutbothwithinandoutside theof icewalls. Company cultures have to change accord‐ingly.Strategy, responsibility, lexibility, collaboration,re‐engineering, performance‐management, well‐being, and trust are some of themany inspiringwordsthatwerespoken.Several topics andmany culturesweremixed inthe event, but thewillingness to share practicesand challenges for central banks was a unifyingthread. To drive change the enabling functionswill need all the competence, energy and spiritthatemergedduringtheworkshop.

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(Workshopon ‘Banknotecirculation,thecashcycle and Banca d’Italia’smonitoring of pro‐fessional cashhandlers’, continued frompage2)Comparedwiththeworkshoponthesametop‐ic held in 2015, some innovations were intro‐ducedintheprogramme.Timewasallottedforadiscussion on recent trends in banknote circula‐tion and on the estimation of banknote require‐ments.Themainfocusoftheworkshop,however,was the monitoring of cash handlers, comple‐mented with information on the responsibilitiesof Banca d’Italia in the ield of anti‐money laun‐dering. Some National Central Banks (NCBs)shared their experience with other participating

Seminars&Workshops(...continued)

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NCBsthroughpresentationsonthemonitoringofbanknotehandlingmachinesofcommercialbanks(Central Bank of Russia), the quality control ofbanknotes and coins (Bulgarian National Bank),the ight against counterfeiting, and banknote is‐suance(CentralBankofRepublicofTurkey).TheprogrammewasintegratedwithavisittotheNa‐tional Analysis Centre set up at Banca d’Italia toprovideparticipantswithpracticalknowledgeonhowsuspectbanknotesaretreated.Themain conclusions of theworkshop are thatthepoliciesandactionsofCentralBanksarecon‐verging. Even though theuseof cash is expectedto decline, cash circulation implies an obligationfor central banks, which are responsible for thebanknoteissuancefunction,toprotectthepublic’strust inthecurrencyasthe legal tenderpaymentinstrumentandtoguarantee itswideacceptance.Therefore, Central Banks have to guarantee theproduction and supply of suf icient volumes ofbanknotesaswellasthequalityofthoseincircu‐lation, the smooth functioning of the cash cyclethroughaneffectivemonitoringofcashhandlers,andstrongeractionagainstcounterfeiting,includ‐ing through the issuanceofnewbanknoteseries.Among the main aspects highlighted during theworkshop were the importance of promptly de‐tectingmarket trends and developments by ana‐lysingcashcirculation, theuseof a riskanalysis‐basedmonitoring, and a commitment by CentralBankstoenhancetheef iciencyofcashprocesses.Thedebatewaslivelyandinteresting.Informationwas shared on the scope of the monitoring(limited to checking banks’ machinery, as in thecase of Russia, or extended to the organizationalmodel,asinthecaseofItaly),ontherequirementsforcashhandlers,andontheproceduresadoptedto impose sanctions. Banca d’Italia explained its

monitoring activity, which was adapted to takeinto account recent developments in banknoterecirculation. As a result, the number of inspec‐tions on bank branches increased, notwithstand‐ingthestillrelevantroleplayedbycashintransitcompanies (CITs) in the cash cycle. In addition,the debate highlighted the positive resultsreached through themonitoringof cashhandlersandlong‐standingcooperationwiththem.Inspec‐tions carried out in 2017 in most cases broughtaboutpositiveresults.AmergerprocessintheCITsector is underway as shown by the decreasingnumberofCITs,whichdecreasedfromaround70in2012toapproximately30in2017.

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(Workshopon ‘Supervisoryactivities:ITtoolsfordatamanagement’,continuedfrompage2)The irstsessionwasdedicatedtotheillustrationof thedifferent stepsnecessary to set up anef i‐cientandreliabledatawarehouseforstoringandsharing data among analysts. The presentationfocused on the main features of Banca d’Italia’sdatawarehousesystem:thedifferentsourcesandcontents of the data collected by the supervisedinstitutions, the structure of the datawarehouseandtheoverall lowofinformationfromcollectiontodissemination.Aspeci icfocuswasputonaus‐er‐friendlyapplicationdevelopedbyBancad’Italiato query data with no need for metadataknowledge.Another presentationwas dedicated to SIGMA, abusiness intelligence tool developed in‐house byBancad’Italia.SIGMAsupportsalloff‐siteandon‐sitesupervisoryactivitiesregardingallsuperviso‐ryentities.Itproducesseveralreportspresentinginformation about the inancial intermediaries’status and assigning an automatic score for eachriskpro ile.Furthermore,itensuresauniformap‐proachintheassessmentsconductedbydifferentunits and permits an evaluation of transparencyand traceability. Great attentionwas given to re‐portingactivities.Duringtheworkshoptheexpe‐riences of Banca d’Italia and Banco de Mexicowereillustrated.ForItaly,apresentationwasgiv‐enonthe‘SMART’project,ariskdashboardtobeusedbybothseniormanagementandanalyststomonitorsupervisedentitiesbyconductinganalyti‐calandaggregatestudies.Furthermore,aspeci icfeatureof the SMART supporting the early inter‐

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vention decision‐making process was illustrated.Theapplicationallowsanalyststomonitorseveralinancialindicatorsthatareusedtoraise inancialred lags to signal theneed for further investiga‐tion on the phenomenon and, if deemed neces‐sary, topropose supervisorymeasures.BancodeMexico illustrated the IT tool that allows it tostandardize and collect data from differentsources, transforming the information comingfromverylargedatabasesinaveryquickwayandalsoproducingtimely inancialindicators.The second daymany participants showed greatinterest inBancad’Italia’sapproach todocumentmanagement. During the two sessions the twomain applications used tomanage and exchangedocuments and information inside and outsideBanca d’Italia were illustrated, describing theiradvantages in terms of more ef icient businessprocesses, lower costs, more and better servicesforcitizensand–wehope–thetransformationofBancad’Italiainapaperlessinstitutioninthenearfuture.Finally, theworkshopbene ited fromthepresen‐tation of theparticipant from theCzechNationalBank, who focused on the issues relating to theexchange of information between different au‐thorities.Theaudienceparticipatedpro‐actively byaskingquestionsandcontributingtoalivelydebate.Thelive demoswere hugely successful as theymadethepresentationsoftheITtoolstrulyinteractive.

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(Seminaron‘Cybersecuritychallengesforcen‐tralbanks’, continued frompage2) The globalinancial system is a prime target for hackers. Itappeals to the pro it‐oriented among them, butalso to those who want to disrupt the orderly

functioning of one or more economies for otherreasons. Given the intensive adoption of infor‐mation and communication technology (ICT) inthe sector, the exposed surface is large. Cyber‐attacks can impart signi icant damage; besidescausingmonetaryand competitiveness losses fortheimmediatevictims,beyondacertainscaletheymayhavethecapacitytounderminetrust.Mindfulofthisthreat,andbuildingondecadesofexperience in ensuring operational continuity oflarge ICT‐enabled infrastructure (e.g. paymentsystems), central banks worldwide were amongthe irst civilian authorities to give seriousthought to cyber‐resilience. A sustained effort ofinternational cooperation, also involving govern‐ments and/or other sectoral authorities, has re‐centlyledtothepublicationofkeyreferencedoc‐umentssuchastheBIS/IOSCOGuidanceonCyberResilience for Financial Market Infrastructures(2016)and theG7FundamentalElements forEf‐fectiveAssessmentofCybersecurity intheFinan‐cialSector(2017).Bancad’Italiahasadoptedamultidisciplinaryap‐proachtocybersecurity.Ahigh‐levelcybersecuri‐tycoordinationgroup,chairedbytheSeniorDep‐uty Governor, brings together experts from IT,banking supervision, payment system oversight,economic research, and organization in order todevelop a strategic vision on the subject. Duringthe seminar, time was allotted for each of thesepoints of view, emphasizing how they relate toeachother.The irst day started with a session intended toplacecyberrisk incontextasanemergingattrib‐ute of the digital economy and to provide a fewbaseline statistics on the economic impact ofcyber‐attacks inItaly.Thiswas followedbyan il‐lustrationoftheinternationalandEuropeanregu‐

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latoryandsupervisory frameworkforcyberriskin the inancial sector.The seconddaywas cen‐tredonITpro iles,both froma technicalandanorganizational perspective, with a focus on theBank’s newly overhauled cybersecurity services,

including the internal Computer Emergency Re‐sponseTeam(CERT‐BI).Thelastdaywasdevot‐ed to a very signi icant challenge: cybersecurityauditing, or verifying compliance in the ever‐changing world of IT systems, whose degree ofvulnerability varies based on factors that rangefrom developments in the external threat land‐scape to thewaynewapplications are installed.Colleagues from the central banks of Armenia,India,andLibyaenrichedtheseminarbypresent‐ing their countries’ experiences in informationsharingwithlawenforcement,thesupervisionofcyberriskinthebankingsystem,andcybersecu‐rity training, respectively. The audience, whichwashighlydiverseintermsofprofessionalback‐ground, engaged in lively, constructive debatewiththespeakers.

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‘…Ibene itedalotfromeverysessionandpresentationastheywerestructuredperfectly.Theknowledgeandinformationsha-redinthesethreedaysoftheseminarwouldhelpourcentralbankalot.Inaddition,Iwouldliketothankyoufortheoppor-tunitythatthisseminarofferedtoconnectandexchangeexpe-rienceswithalltheparticipants...’

TheparticipantfromCentralBankoftheRepublicofKosovo

intheseminaron‘CybersecuritychallengesforcentralBanks’

B ’I ‐I

DirectorateGeneralforEconomics,StatisticsandResearch

ViaNazionale,9100184Roma—ItaliaTel.+390647921

Youtube.com/bancaditalia Google.com/+BancaditaliaEurosistema @Uf icioStampaBI

www.bancaditalia.it

Thisissuewaspreparedby:

ClaudiaBiancotti,MassimoDellaCamera,MiriamDiBattista,ClorindaForte,AdrianaSelvaggi.

SpecialthankstoAlessiaPalumboandValentinaLongeriforchartsandgraphics.