The sovereign debt crisis is still limiting their access to wholesale funding. The Bank of Italy’s controls and supervisory practices, banks’ low exposure to structured finance products, and the absence of a real estate bubble are what underlie the stability of the Italian banking system. These factors explain the lesser need for government intervention. However, the banks are suffering from the protracted economic recession.
Given their effectiveness in curbing excessive credit flows, in December last year the ECB Governing Council called upon governments to implement the legislative basis for borrower-based measures in all euro area countries. In addition, the ongoing review of the macroprudential framework in the EU provides an excellent opportunity to make these tools available to macroprudential authorities on a common legal basis.