Abi and the ECB's Monetary Policy. Patuelli's thought

The President of the ABI, Antonio Patuelli, and the General Director, Giovanni Sabatini, today sent a letter to the President of the ECB, Mario Draghi, and to the Governor of the Bank of Italy, Ignazio Visco, with reflections on the policy choices monetary policy that the ECB Board of Directors is preparing to assume.

The letter states that the Italian Banking Association considers it important to represent the assessment of the current European economic context and the implications that monetary policy choices can have on the economic balance of banking companies and the economy in general.

Donation campaignThe monetary policy choices made by the ECB during the two phases of the great financial crisis have allowed us to safeguard the integrity of the Euro, to mitigate the impact of the crisis on the European economy, on businesses and on families and, consequently, to have effects. also for banks despite the effects of compression on the interest margin.

In the same period the banks were committed, and continue to be, in an impressive effort to adapt to the new regulatory requirements, above all in terms of capital strengthening despite the reduced capacity for internal generation of capital, especially when compared with that of US banks.

The process of strengthening and cleaning the budgets from the consequences of the crisis has been successfully pursued, as witnessed by the national and European supervisory authorities, but today suffers the effects of the global economic slowdown, a consequence of geopolitical tensions and wars commercial.

In this context, in which the signals of downside risks to the global economy and the Euro area are intensifying and inflation expectations return to move away from the ECB's target of a rate below, but close to 2%, the monetary authorities have reviewed the path towards a return to normalization of monetary policies and in particular the ECB's Board of Directors has confirmed the need for a highly accommodative monetary policy orientation for a prolonged period of time.

As mentioned by them several times, monetary policy, so that it can fully develop its effects, must also be accompanied by the action of governments aimed at reviving public and private investments, promoting structural reforms quickly and balancing the current account balances between the countries of the Euro area.

In the current situation and in more serious actions by European governments to revive the economy, banks operating in Italy want to represent the need for the continuation of a highly accommodative monetary policy to be accompanied by measures that mitigate the negative effects on the profitability of banks, such as, for example, a multi-level system for the remuneration of reserves held at the Central Bank.

At the same time, we believe it appropriate to underline that the transmission of the accommodative monetary policy on companies and families, through the credit channel, can today find obstacles in regulatory measures which, despite the shared objective of increasing the stability of the banking sector, strongly reduce capacity to provide credit especially to smaller companies that suffer most in the negative economic cycle.

Abi and the ECB's Monetary Policy. Patuelli's thought

| Economics, EVIDENCE 2 |