The less risky tranches backed by portfolios of mainly newly-granted loans could be covered by government guarantee. The State would not be required to make an immediate outlay of funds and its guarantee would be adequately remunerated. Anti-crisis measures Economic policy currently presents more difficulties in Italy than in other countries. Action to bolster demand is restricted by government debt from the past.
Measures taken to date to mitigate the social costs of the recession have relied mainly on funds allocated to other purposes. But firm and credible action to set the public finances right within an agreed time frame can provide scope for a more incisive economic policy. The first concern is the danger of a further deterioration of labour market conditions.