Bank of Italy Governor Ignazio Visco said Tuesday that increased public spending on infrastructure is essential to stimulating economic growth and reversing the country's decline.
As important as central banks' monetary policy, including interest rates, is to the economy, "it is not enough," Visco told an economic forum.
Italy entered its third recession since 2008 in the first half and with high unemployment and at least one month of deflation, the economic indicators are very negative.
"In many respects, we are traveling in uncharted territory," said Visco.
His comments came one day after European Central Bank (ECB) President Mario Draghi said that growth in the eurozone was stalling, and repeated his call for strategic public investments in infrastructure to kick-start the economy.
Draghi also urged government reforms to increase flexibility in domestic economies.
Visco added that the "most urgent" government measures needed are those aimed at protecting the legality and efficiency of Italy's civil service. The government of Premier Matteo Renzi has proposed public-service reforms, including measures to boost efficiency and save money, which could then be used for higher priorities including labour-related tax cuts.
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