. without detracting from the importance of economic and monetary policies or of the action of the bodies entrusted with safeguarding macrofinancial stability, the fundamental aspect consists in the steps banks take to strengthen their risk - management policies and procedures and to counter the pressure on their margins arising from the growth in competition in national and international markets. in europe the presence of many large global firms of high standing, the dismantling of the barriers inherent in the denomination of securities in different currencies and the possibility of referring to a single yield curve will foster the development of the market for private sector securities. for large companies, whose operations cover several national markets and whose financial management involves several different currencies, the new single currency regime will reduce the need to do business with a plurality of banks. a reduction in the demand for credit from prime companies appears possible, the spread of private sector securities may cause problems for fund - raising. though marked by national traits in legal and fiscal matters, the configuration of the financial system of the european union will becorne more similar to that of the anglo - saxon systems. the profitability of traditional lending to enterprises is likely to come under pressure ; the need to develop business with different categories of customers and to look for profit opportunities in foreign markets will involve both old and new credit risks. the changes under way make it necessary to grasp the growth opportunities offered by corporate finance services ; this will give further impetus to the spread of financial techniques for the management of risk and to the growth of the securitization market. the ability to manage risks, above all credit risk, efficiently, will be a competitive strength of crucial importance ; it requires intermediaries to adopt the innovations made possible by today ’ s statistical models and financial techniques, to integrate them into their internal organizations, and to develop the necessary professional skills. active management of the loan portfolio, frequently indicated as the new frontier in lending, cannot be independent of the effectiveness of the traditional procedures, from the assessment of creditworthiness to the constant monitoring of loan performance. in a market such as italy ’ s, in which very little recourse has been made to rating by specialized agencies, banks lacking an internal rating system sound enough to be approved by the supervisory authorities would find themselves at a competitive disadvantage. businesses of high standing would stand to obtain better conditions from other banks able to apply capital charges more consistent with the riskiness of the financing. the revision of the capital adequacy framework is

up from negative levels to 3. 4 per cent, while ten - year rates have increased from barely positive values to 2. 7 per cent. in real terms, using the inflation - linked swap ( ils ) as a deflator, interest rates currently stand at about 0. 9 and 0. 3 per cent respectively, from around - 4 and - 2 per cent at the end of 2021 ( fig. 8 ). another look at the role of supply and demand factors and a first measure of the effects of monetary tightening can be obtained through a quantification of the structural drivers of euro area and us inflation expectations, as measured by ilss, obtained by breaking down their daily fluctuations into domestic and global shocks ( fig. 9 ). 11 leaving the technicalities aside, results show that, since the start of the war in ukraine, inflation expectations ( 5 - year ils ) in the euro area increased mostly in response to supply shocks ; the much smaller contribution of demand shocks rose progressively over the course of 2022, reflecting improved business cycle conditions. results also document strong spillover effects of us monetary policy on euro area inflation expectations since the second half of 2022 and initial signs that the ecb ’ s monetary policy tightening is having the desired soothing effects on the economy. in the united states, on the other hand, inflation expectations had been steadily sustained by domestic demand until the end of last october, and have since been reined in by contractionary monetary policy effects. other preliminary signs of the success of the ecb monetary strategy can be found by looking at headline inflation, which came down from its peak of 10. 6 per cent in october 2022 to 8. 5 per cent in january 2023, although the core component has remained steady at 5. 2 per cent, owing to the usual lags in the pass - through of increased energy prices. on a 3 - month annualised basis, which offers the most faithful representation of the impulses that have been predominantly driving inflation recently, the deceleration of prices has been even more marked ( fig. 10 ). given the previous historical excursus, and despite the current encouraging signs around the inflation situation, we may wonder whether the euro area will experience the long persistence of inflation observed in many countries during the 1970s. i believe that this is very unlikely, not only because of substantial improvements in monetary policymaking, but also and above all because of the numerous structural changes that have taken place in our economies since