Rome – The recovery has started but now Italy must aim to “return to stable growth, that offer new ways of working”, through a consolidation of reforms and a strengthening of the banking system. In “Final” at the annual Bank of Italy Governor Ignazio Visco trace a path between the pillars has always closer European integration, but warned that “in the debate between countries, sometimes difficult and tense, you better listen to those shows do well at home, to honor fully their commitments. ” And then Italy should continue the work undertaken: the judgment of Via Nazionale is positive, remembers the action of reform initiated “to remove barriers to the development of the country”, “internationally recognized institutions and markets”. They praised in particular the recent reform measures of the labor market, and “the big boost of permanent hiring in early 2015″, described as “a positive signal”. He, however, urged the government to continue on the path initiated “in order not to disappoint the expectations of change necessary to broaden the spectrum and speed up its implementation.” Although “in some cases the benefits are not immediate, but this is one more reason to act, pursuing a consistent and coherent plan.”
On the resumption, and not only on the Italian, but he weighs the spectrum of the Greek crisis . So far, says Visco, “he has had a limited impact on premiums for sovereign risk in the rest of the area, reflecting the reforms undertaken in many countries, the progress made in European governance and in the tools available to the authorities to avoid contagion.” However in the future the consequences could be worse: “The difficulties of the Greek authorities in the definition and implementation of the necessary reforms and the uncertainty on the outcome of lengthy negotiations with the European institutions and the International Monetary Fund fueling tensions serious, potentially destabilizing “.
And as the role of banks is crucial in supporting the economy, of course Visco does not let slip the opportunity to remember how important it is to take measures that will enable the banking system to retake the ‘Italian economy. Of non-performing and impaired loans you get, remember, to 17.7% of loans, a rate three times higher than pre-crisis incidence “of impaired items”, which in 2008 stopped at 6%. A burden that forces banks to set aside “substantial resources”, resulting in a “bond disbursement of new loans.” And then Visco recalls once as “the development of a secondary market for loans, now almost nonexistent, would help to reactivate the full funding to households and businesses” is the so-called “bad bank”, which is spoken by proper time to urge the Bank of Italy, although not all.
“We propose initiatives in this direction for some time – reiterates the governor – even with the assistance of the public sector, we are working with the government to draw them in respect of European rules on state aid. It ‘going on a discussion with the European authorities, which we hope will be rapid and constructive. ” Visco but adds that the new rules “on capital, leverage and liquidity”, which aim to “protect the integrity of the banking system”, will have as a necessary consequence, the greater selectivity in loans. Therefore “the shift of part of the process of intermediation by banks to markets will benefit both to businesses and to families, allowing the first to expand the types of loans, the second to further diversify the economy.”
The recovery will be strengthened. In the coming quarters the Bank of Italy expects further growth: “The increase in GDP in the first quarter broke a long cyclical unfavorable – says Visco – would continue in the current quarter and in subsequent years. ” The governor points out that “the acceleration of exports is accompanied by a recovery in domestic demand. It continues the rise in household spending, especially for durable goods, due to better prospects in disposable income. The dynamic investment turned positive, and according to assessments of businesses will strengthen during the year. “
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They share consumption, spent 90% bonus 80 €. Powered by via the National bonus of 80 euro introduced by Government Renzi: the survey on household budgets conducted by the Bank of Italy indicates fact “that 90% of the bonus tax would be spent and that, in early 2015, the share of households that signals arriving with difficulties at end of the month would be slightly reduced compared to a year earlier. ” More generally, says the report, “in the middle of last year spending on household consumption increased for the first time since 2010, but remains below the levels of 2007 by approximately 8%.”
On with the Quantitative easing . Monetary policy has offered significant support to the recovery, and Visco asked to accomplish more with determination the program of quantitative easing from the ECB. Visco lists the positive effects of the program of purchases of government bonds: “Fears of deflation have been reduced, but the positive effects of the program so far observed should not weaken the determination to carry it out, they are indeed a confirmation of the need to bring it to completion “. For the governor “is the credibility of this commitment that depend improvements, the cost of incomplete implementation would be very high. The return of inflation to levels consistent with an annual change in consumer prices below but close to 2 percent over the medium term must be durable. “
Well the reform of cooperative banks. Visco welcomes the reform of the banks recently launched by the government “will facilitate the efficient functioning of credit intermediation in a market made more competitive by the bank.” On the contrary, “the co-operative form” previously had “limited the scrutiny from investors and hampered the ability of timely access to capital markets, at times crucial to cope with external shocks.”
But the government transposes EU directive on banking crises. In terms of the renewal of the banking system, the governor of the Bank of Italy, however, notes that Italy has not yet transposed the Directive on the reorganization and on bank resolution, though the term has expired late last year: “from 1 January 2016 will be introduced into our law also forecasts the bail-in”, he recalls. “We hope for a quick approval of the delegation examined by Parliament – says Visco – to allow the government to issue the decrees necessary to adapt the regulatory framework in this extra step Italian Banking Union”.
Profits and sale of shares. With regard to the management of the Bank of Italy, Visco indicates that last year was achieved a gross profit of just under 6 billion. Of these, by statute, the state will be 1.9 billion while shareholders shall it was decided to recognize a total dividend of 340 million. The state also taxes 1.2 billion. The coupon fixing the start of 2014 did the process for the sale of shares in excess of 3% in particular by Intesa Sanpaolo and Unicredit. Visco fact announces the decision of the High Council, to “encompass normally dividends in future years” in the interval between the dividend this year and that paid last year (380 million) after the reform of the capital. Essential step to determine a value of the units. The bank, meanwhile, “is working on the dematerialisation of the shares” to facilitate trade in a secondary market.
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