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BANCA D’ITALIA: Intervista del Direttore generale della Banca d’Italia e Presidente dell’IVASS Signorini

Banca d'Italia

(AGENPARL) – ven 05 agosto 2022 MN INTERVIEW: Italy To Grow Into Q1 2023
BOI’s Signorini
Italy’s economy has outperformed analysts’ forecasts, Bank of Italy Senior
Deputy Governor Luigi Federico Signorini tells MNI
Santi Pinol
(MNI Rome)
The Italian economy is proving resilient to the war in Ukraine,
supply bottlenecks and rising commodity prices and sho
uld continue to grow
into the first quarter of 2023 after “reassuring” second quarter gross domestic
product data, Bank of Italy Senior Deputy Governor Luigi Federico Signorini
told MNI.
“Since 2021, the actual figures have tended to surprise positively wh
compared with analysts’ predictions, confirming the overall good performance
of the Italian economy in these difficult times,” Signorini said in an emailed
interview, pointing to data released last week confirming GDP growth at 1% in
the second quarter
versus the first.
Signorini said he was confident growth should continue into 2023, in line with
recent European Commission and International Monetary Fund forecasts.
Nor should the eurozone slip into recession as the European Central Bank
tightens policy,
he said, noting that the latest Eurosystem projections, which
incorporate market interest rates, foresee inflation returning to 2% by the end
of 2024 without a fall in output.
“In those projections no recession is expected to be needed to achieve the
system’s inflation target,” he said, stressing that future monetary policy
decisions will be data
dependent.
The ECB’s new Transmission Protection Instrument will be a “key tool” for
consequences of the policy normalisation”, he added. (See
MNI SOURCES:
Majority Sufficient For ECB’s New TPI Tool
EXCEPTIONAL UNCERTAINTY
Still uncertainty is “exceptionally high”. The Covid pandemic and a global
slowdown are both risks, while an inter
ruption to supplies of Russian gas would
have a serious impact on the economy.
“Not just directly, through the temporarily reduced availability of fuel, but also
indirectly through higher energy prices, a slowdown in global trade and a fall in
business and
consumer confidence,” he said, praising progress made by Prime
Minister Mario Draghi in reducing the country’s dependence on Russian gas
from 40% to 25% and European Commission contingency plans to mitigate the
effects of any cut in supplies.
Reopening co
fired power stations would be only a “short
run fix”, according
to Signorini, who said there is no trade
and energy security and that scarce public resources should be used to protect
vulnerable households and he
lp them transition to clean energy rather than to
keep energy prices low.
“We would certainly have preferred a gradual, policy
oriented and carefully
planned transition, with sufficient room for redistribution, to an exogenous,
violent shock that leaves al
l of us poorer,” he said, though he noted that the
recent rise in fossil fuel prices “was needed anyway to help achieve the climate
related transition.”
The green transition may affect relative prices more than overall inflation levels,
Signorini said, add
ing that about 60% of Italy’s current inflation can be
explained by direct and indirect effects of energy prices.
But authorities must ensure that current price increases “morph into a stubborn
inflationary process” like in the 1970s.
e of the risk and avoid starting a price
wage spiral”, he
said, adding that in Europe wage and non
fuel price increases are moderate
“on the whole.”
MNI INTERVIEW 2 (RPT): Italian Banks Ready For
Basel
Signorini
New rules on risk weights will not restrict the flow of bank credit to Italian
companies, the Bank of Italy’s Luigi Federico Signorin
i tells MNI
Santi Pinol
Italian banks are well positioned for the phasing in of the remaining elements
of Basel III regulations by 2025 and new rules on risk weights should not reduce
the flow of credit to firms, Bank of Italy Senior Deputy Governor Luigi
Federico
Signorini told MNI.
Banks have already boosted capital levels significantly during the course of
Basel III, though remaining steps including the fundamental review of the
trading book are crucial, said Signorini, pointing to how credit continued t
o flow
The ability of banks to withstand episodes of financial turmoil since 2020 has
been a vindication of the Basel reforms, he said in an interview.
This time banks
have been
part of the solution, not part of the problem, said Signorini, who
declared himself proud of his own work on the Basel Committee.
In contrast,
regulation of non
bank financial institutions has been disappointingly slow so
far, he added.
INSURERS
Italy’s
insurance industry is also in solid shape as rates rise, Signorini said.
While volatility in Italian sovereign spreads led them to lose money on their
holdings in May for the first time in recent years, and their exposure to
government debt has to be caref
ully considered, he noted that Solvency II rules
also tend to reduce their liabilities in such conditions.
In terms of market value, an increase in rates, especially of the risk
free rate,
does not only affect assets, by lowering the prices of portfolio se
curities, but it
also affects liabilities, by reducing the current value of insurance liabilities,
said
Signorini.
Italy’s insurers, who reported an average solvency ratio of just under 240% at
the end of June, slightly down from 2021 but well in excess o
f the regulatory
elsewhere in Europe, he said. Signorini, though, said he was calling for tighter
supervision of cross
border operations by insurers operating in other European
Union
member states, in order to guarantee consumer protection
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