Consent to the reform of cooperative banks, openness to the Bad bank as long as it is not state aid and confidence in growth with new estimates revised upwards thanks to the contribution of the ECB's Quantitative easing. These are the main points of the speech by the governor of the Bank of Italy Ignazio Visco in his usual annual speech at the Assiom Forex (currently in its 21st edition in Milan).
POPULAR BANKS, ADAPTING DOESN'T MEAN SUCCEEDING TO FOREIGNERS - Visco defended the position expressed by Economy Minister Pier Carlo Padoan on the reform of cooperative banks, pointing out that "it responds to needs that have been signaled for some time - by us, by the International Monetary Fund and by the European Commission and now made more pressing by the transition to the single supervisory system". Adapting to the new international framework – explained Visco – does not mean succumbing to an unidentified foreign capital”. Visco thus expresses his consent to the reform, emphasizing that adaptation to the international framework means "increasing production, organizational and capital capacity in a broader context than the national one".
YES TO A BAD BANK THAT IS NOT STATE AID – An important passage in Visco's speech then concerned the possible establishment of a bad bank, a hypothesis that has been discussed for some time now with a view to freeing the Italian banking system from the burden of non-performing loans which prevents the release of resources for the disbursement of new loans. "The divestment of non-performing loans - said Visco - is crucial to allow banks to find resources to allocate to the financing of the real economy". And so Visco has opened up the hypothesis of a direct intervention by the State to deal with the deterioration of credits induced by the severity and length of the recession, as well as the need to ensure adequate funding flows to the economy. However, Visco specified at the same time that an intervention must be carried out "not to remedy the assumption of excessive risks by individual banks" and that it must take place "within a scheme which, in compliance with the European rules on competition , provides for the full involvement of the banks in the costs of the operation and an adequate remuneration of public support”. Then "suitable tax breaks" or the "provision of public guarantees on assets deriving from the disposal of non-performing loans" should be put in place, which would create "more favorable conditions for the development of a private market for non-performing loans.
REFORMS IN THE RIGHT DIRECTION FROM THE QE PUSHING FOR GROWTH – Support for the work of Matteo Renzi has also arrived from Visco, whose reforms "go in the right direction". Bank of Italy's new estimates forecast growth of more than 0,5% in 2015 and 1,5% in 2016 compared to the previous forecasts of +0,4% and +1,2% (Economic Bulletin). A boost to growth, estimated conservatively, which comes from the ECB's Qe which will have an effect of one percentage point over the two-year period. On the Qe of the ECB, however, Visco wanted to clarify that "a full sharing of risks would have been more consistent with the unity of monetary policy", adding that "the decision to leave the balance sheets of the individual NCBs (national central banks) the risks associated with possible losses on government bonds purchased by them takes into account the concern, present within the Governing Council, that in the current institutional set-up of the area this monetary policy action could lead to transfers of resources between countries not approved by legitimated to do so". At the same time, the number one on Via Nazionale recalled that “the purchase of public securities does not make reforms aimed at increasing the growth potential of the countries in the area less necessary, nor less probable. On the contrary, it can favor them, with the improvement and less uncertainty of the macroeconomic prospects”.
