I will then discuss the situation of Italian banks against the background of Italy’s economic recovery. Over the last few years the euro area has experienced a challenging environment indeed. Downward risks to price stability increased sharply after mid-2014. There was a material risk of expectations de-anchoring.
However, other firms, facing difficult financial conditions and intense pressures to cut costs, seem to have found longer-lasting, efficiency-enhancing changes that allowed them to reduce their workforces; and some less-efficient firms, no longer able to compete, closed their doors. Again, improved efficiency confers great benefits in the longer term.