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Eurosystem, ECB and Italy

Verantwortlicher Autor: Carlo Marino Rome, 04.01.2018, 08:54 Uhr
Fachartikel: +++ Wirtschaft und Finanzen +++ Bericht 7282x gelesen

Rome [ENA] In Italy the public-sector borrowing requirement rose 5.4 billion euros to 53.2 billion euros in 2017, according to a statement of the economy ministry on Tuesday 2nd of January. The ministry said the result was affected by a good tax take and a sale of frequencies on the upside and, on the downside, by the 10.2-billion-euro effect of bank and savers' bailouts over the year. Debt-servicing costs in Italy fell

over 1.4 billion.On the European side, the Eurosystem macroeconomic projection of September 2017, tells annual inflation in the euro area as measured by the Harmonised Index of Consumer Prices (HICP) is expected to be 1.5 % in 2017, 1.2 % in 2018 and 1.5 % in 2019. Without ECB’s policy package, inflation would have been almost 0.5 % lower on average than the rate currently projected for the years 2016-2019 The members of the ECB Executive Board have frequently stressed the importance of implementing productivity-enhancing reforms in the euro area, as well as growth-friendly fiscal policies, within the framework of the Stability and Growth Pact.

Growth and unemployment rates remain geographically asymmetrical to a significant degree, causing dangerous fragility for the economy and jeopardizing sound development. ECB’s monetary policy has reduced to some extent the cost of credit and has facilitated the access to finance for companies and households in the euro area, with particular impact in certain Member States, as noted by the 2016 ECB annual report, which states that the cost of borrowing for euro area households persist in varying across countries.

It’s crucial to consider, therefore, that the effect of this policy is limited owing to subdued credit demand, the persistence of structural problems in the banking systems of some Member States, like Italy, and lack of trust among financial institutions themselves. One has to note that the contribution of the accommodative monetary policy pursued by the ECB, including its low interest rates and assets purchase programme, in the period 2012-2016, to the cyclical economic recovery and employment creation prevented deflation, sustained favourable financing conditions for companies and households, and maintained financial stability and the proper functioning of the payment systems.

However, one ought to be concerned at the consequences of the unconventional monetary policy measures for individual savers and the financial equilibrium of pension and insurance schemes as well as the build-up of asset bubbles, which should be carefully monitored by the ECB and minimized. A prolonged period of an almost flat yield curve of the interest rate could affect the stability and profitability of the banking system. Nonetheless a bank’s profitability eventually depends on its business model, as well as on its structure and balance sheet, low interest rates notwithstanding.

EU's banking sector is typified by diversity, not least as a result of national specificities, which in turn contributes to the stability of the financial system. At its meeting of 9 and 10 March 2016, the ECB Governing Council adopted further measures to achieve the primary objective of price stability and the secondary objective of supporting the economy through monetary policy, by: 1) a reduction in its key interest rates and a lower deposit facility rate of -0.4 %; 2) an increase in monthly purchases under the asset purchase programme (APP) to EUR 80 billion; 3) the inclusion of a new corporate sector purchase programme (CSPP) in the APP for purchasing investment-grade euro-denominated bonds issued by non-bank corporations established

in the euro area; and 4) a new series of targeted longer-term refinancing operations (TLTRO) with a maturity of four years. At its summit of 7 and 8 December 2016, on the other hand, the ECB Governing Council established to extend the horizon of the asset purchase programme at a lowered monthly pace (from EUR 80 billion to EUR 60 billion), from April 2017 to December 2017, or beyond if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.

While the current policy of low interest rates has a temporarily positive effect on the level of nonperforming loans (NPLs), the high risks related to nonperforming loans should be attacked efficiently in a structural fashion. One has to note that the ECB’s and SSM’s made efforts in supervising and assisting banks in the euro area in order to reduce their nonperforming loans exposure, and in particular the guidance provided by the ECB to banks on tackling nonperforming loans in March 2017 and its actions concerning individual banks, as well as the action plan approved by the ECOFIN Council of 11 July 2017.

Last but not least, in the European Union bank stress tests must be characterized by wide coverage, methodological pertinence and robustness. And one hasn’t forget the story of Banca Monte dei Paschi di Siena (MPS) that was Italy's third-largest (and oldest) bank until 2016, when it was forced to admit it had loaned out billions of euros that were never likely to be repaid.

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