Inward investment in Italian bonds and shares amounted to 61.5 trillion lire in 1995; in 1996, owing mainly to the increased liquidity of the international market, the inflow of funds rose to 125 trillion lire. It remained at about that level in 1997 and then rose to 165 trillion lire last year.
Funds were attracted from abroad by the steady improvement in inflation and the consequent expectation of lower interest rates. These factors were consolidated and reinforced in 1998, inter alia by Italy’s imminent adoption of the single currency. Italian portfolio investment abroad has increased more rapidly. Portfolio investment outflows were substantially less than inflows in both 1995 and 1996.