“In the last year, the growth of the global economy has definitely strengthened; the uncertainties related to trade policies in the United States and to possible increases in risk premiums on the financial markets remain. In the euro area, monetary policy has averted the danger of deflation but inflation remains far from values consistent with monetary stability”: thus the governor of the Bank of Italy Ignazio Visco opened his speech at Forex in Verona.
After the overview of the international situation, Visco, addressing the congress of financial operators less than a month before the elections, quickly moved on to the Italian situation, recalling that “a tangible and continuous decrease in the ratio of debt to GDP must not be delayed. First of all, reducing payback times requires budgetary discipline”. Structural reforms aimed at raising the economy's growth potential are, according to the head of Bank of Italy, “essential. Debt and reforms must remain an obsession also because an increase in interest rates is expected on the horizon which will only have no impact on our economy if homework is done. It is not the normalization of monetary policy that we need to worry about but the credibility and effectiveness of the reforms and the process of reducing the ratio of debt to GDP”, Visco reiterated.
Speaking then of the banks, Visco underlined the improvement of some fundamentals. “Although still low, the profitability of the major Italian banks improved in the first nine months of last year. But – remarked Visco – a profound revision of the operating models of the banks, in Italy as in all of Europe, remains inevitable and important elements that could curb profitability should not be underestimated”. So the governor has hoped that institutions would act on several fronts to recover profitability and competitive capacity: "Further reduce costs, carry out aggregation operations or consortium-type initiatives that will make it possible to exploit cost and revenue synergies, invest to effectively seize challenges and opportunities connected with developments in the Fintech sector".
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