The growing flow of savings invested abroad also reflects a domestic supply of financial instruments that is still not sufficiently diversified in terms of risks and returns. BIS Review 110/1997  -4-  Italy’s participation in the global market of finance has encouraged foreign capital inflows, mainly directed towards the government securities market.
At the end of last year non-residents held 370 trillion lire of Italian government securities or 20% of the total amount outstanding, compared with 4% at the end of the 1980s. When doubts have emerged about the soundness of economic policy, foreign capital inflows have ceased suddenly and given way to outflows, supplemented by substantial exports of Italian capital.