The Bank of Italy’s supervisory action and the banking union Thanks in part to the action of the Bank of Italy and in spite of the sharp deterioration in loan quality, between September 2012 and September 2013 the non-performing loan coverage ratio rose from 38.3 to 39.9 per cent on average for Italian banking groups.
The ratio of core 4  BIS central bankers’ speeches  tier 1 capital to risk-weighted assets rose from 10.0 to 10.6 per cent. Coverage and capital ratios must continue to increase; this preserves investors’ confidence in the banks and lowers the cost of funding, thus helping to ensure an adequate flow of credit to economic activity.