On the contrary, and especially in the conditions of international openness typical of the Italian economy in normal circumstances, an inefficient banking system is bound to be prone to systemic instability, even though oligopoly allows it to be profitable.
A powerful stimulus to achieve profitability and hence a congruous capital base through efficiency could clearly be detected in the increase in competition in the domestic banking and financial markets. Increased competition therefore became the key intermediate objective, the fulcrum of the Bank of Italy’s monetary, exchange rate and supervisory policies.