The full rationalization of the sector and effective supervisory action now depend on the issue of the necessary ministerial measures. The financial system’s main counterparties – households and firms – are not suffering from serious imbalances in Italy. The net wealth of Italian consumer and producer households is high by international standards and is associated with low debt.
The other major lagging economy is Japan, and the outlook is perhaps a bit more difficult to assess following the announcement of significant monetary and fiscal stimulus packages. It is not clear to what extent the massive liquidity injection $ trillion over the next two years announced by the Bank of Japan will result in higher domestic expenditure.