Increases in the domestic money supply will result unless the central bank offsets the effects of these purchases on the money supply by selling bonds to investors, primarily commercial banks, in exchange for RMB - a procedure commonly referred to as "sterilization."
The measures adopted have been successful in eliminating the tail risks weighing on both individual banks and the sector as a whole. In fact, over the last six months, stock prices of major Italian banks rose by 25 per cent, against the 11 per cent on average for major European banks.