Finance and Markets Featured Visco: Qe effect on GDP, more than 0.5% this year, 1.5% next year. Green light to the bad bank
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Maximilian Cellino, with an article by Marco Ferrando | February 7, 2015
Effect “ quantitative easing ‘Italian on growth, via free to “ bad bank “, provided that does not represent state aid and that it is profitable for emergency responders in support of lenders, appreciation for the work of the government Renzi on the Jobs Act and reform of popular. These summarize the key points of the speech given by the Governor of the Bank of Italy, Ignazio Visco, on the occasion of the 21th Congress Assiom Forex Milan.
ECB: Bank of Italy will purchase 130 billion of government bonds
The purchases of government bonds announced by the European Central Bank (ECB) on January 22 are a “measure of great importance, which is characterized by its amplitude, higher than market expectations, the rapidity which is initiated, the absence of a time limit rigidly default, “says Visco, the Bank of Italy will play its part, by making purchases commensurate with their share of the ECB capital, which could then” be of the order of 130 billion . “
Italy: 0.5% GDP growth in 2015 and 1.5% in 2016
The effects of this program were already partly observed on the financial and currency markets but the boost to recovery could be even higher than previously estimated: the impact on Italian GDP could “overcome, ceteris paribus , one percentage point in the period 2015-2016,” according to Visco. As a result of the stimulus measures that will be implemented dall’Eurotower, the Bank of Italy has taken steps to increase the economic estimates for our country already published in the economic bulletin of 16 January: GDP growth is now “evaluable above 0.5% this year and 1.5% next year, “compared to 0.4% and 1.2% previously expected.
Reforms Renzi” go in right direction “
The stimuli of monetary nature, does Visco remembered, not sufficient in themselves to consolidate and strengthen the signs of recovery:” In the absence of a parallel budget action – said the governor – the effects on demand can be contained; are set to run out in the medium term if no action is taken on the structural growth potential of the economy, with tools that are able to increase productivity and employment together, creating new revenue and new demand. “
In this respect, Visco has recognized the commitment of the Government Renzi “to sustain consolidation of public finances”, also claiming that “the measures introduced so far are in the right direction.” In particular, the, reference is to the first two decrees of the so-called Jobs Act, which “have expanded the protections provided by unemployment benefits and reduced costs I procedures for settlement of labor relations and the uncertainty about their final results.”
Reform responds to popular demands for some time signaled more aggregation between Bcc
Praise also for the reform of the banks that “meets the needs of the time reported by us, from the IMF and the EU Commission and yielding more pressing by the changeover to the single supervisor. ” Failure is not even a wild stab at the system of cooperative credit banks, whose “weaknesses stem from the size – in some cases very small, with effects on costs and capacity for innovation – and concentration, sometimes excessive, of credit risks. Visco essentially calls for a rationalization of the system including mergers and a greater degree of integration that facilitates increased operational efficiency.
On the “bad bank”, but it is not State aid
Notation conclusive on the assumption of creating a “bad bank” in Italian financial system ” The discounting of impaired loans is crucial to allow banks to raise resources for the financing of the real economy, “said Visco. There is thus a substantial green Bankitalia operation, but on condition that occurs “in the context of a scheme that, in compliance with European regulations on competition, to the full involvement of the banks in the transaction costs, and a ‘ adequate remuneration of public support. ” The intervention should not essentially represent state aid and therefore should provide remuneration for those who rushes to the aid of banks.
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