Despite the contraction in activity, leading international organizations and professional forecasters do not expect a deflationary spiral to set in. The additional expenditure and reduction in revenue that Italy has approved for countercyclical purposes amounts to about 0.5 percentage points of GDP; these measures are financed by others of opposite sign.
While central banks are best known for their monetary policy work, we also have a very large stake in the stability of the financial system. Importantly, financial instability can take a serious toll on the economy.