work on this task. as regards organizational arrangements, the reform initiated to consolidate supervision on the conduct of banking and financial intermediaries, strengthen customer protection tools and increase financial education levels for the public was implemented, and a new directorate general dedicated specifically to these tasks was established. furthermore, the tasks relating to monetary circulation and those regarding retail payment instruments have been integrated into a single directorate general, with an emphasis on technological developments. to support the financial system ’ s adoption of digital technologies and foster their safe use for financial stability purposes, the bank of italy has launched milano hub, its new innovation centre. the features of the eurosystem ’ s payment systems were improved during the year. in this respect, the bank acts as sole service provider for the development and management of the target instant payment settlement ( tips ) platform. the platform, which offers an innovative and safe solution for the instant settlement of retail payments, is able to increase the speed of not just payments between individuals and firms, but also those with government bodies. 4 / 5 bis central bankers'speeches as usual, further information on the activities of the bank and on the organizational and management measures implemented in 2020 will be available in the report on operations and activities of the bank of italy, to be published in may, on the occasion of the presentation of the annual report. more information on the bank ’ s commitment to the issue of environmental sustainability may be found in the yearly environment report, available on the bank ’ s website. proposal for the allocation of the net profit dear shareholders, pursuant to article 38 of the statute, acting on a proposal of the governing board and after hearing the opinion of the board of auditors, i present for your approval the board of directors ’ proposal for the allocation of the net profit. on behalf of the board of directors and the governing board, i would like to take this opportunity to thank the board of auditors for their diligent and accurate work. under the dividend policy in force, the amount paid to the shareholders is kept within a range of €340 million to €380 million, provided that the net profit is sufficient and without prejudice to the bank ’ s capital adequacy. the difference between the upper limit of the range and the dividend paid to the shareholders may be allocated to the special item for stabilizing dividends, until this item reaches a maximum amount of €450 million. accordingly, from the net profit of €6, 286 million, we propose

policy is perceived as the phillips curve t h e p h illip c u r ve in f latio n * b * a u n e m p lo ym e n t in f latio n * b * c u n e m p lo ym e n t focusing primarily on the stabilisation of employment. as we have seen, people ’ s expectations play a major part in the inflation process. if people expect monetary policy to concentrate in the first place on stabilising employment, then firms and employees will not regard unduly high wage increases as all that serious because they will count on measures being taken to stimulate demand if employment is in danger. sweden in the 1970s and ’ 80s is a good illustration of the problems that may arise. wage and price increases in that period were systematically higher than in other countries, which led to recurrent cost crises and problems with competitiveness. an important reason for the lack of adjustment to wage increases in the rest of the world was that employees and firms reckoned that the government and the riksbank would ultimately bail them out with devaluations, which is what actually happened. in this way inflation expectations were adjusted in advance to an anticipated pattern of economic policy reactions, whereby high price and wage increases were accepted or accommodated by devaluing the krona. as a result, strong inflationary mechanisms were built into the economy. as we have seen in recent years, once such mechanisms have been established, they are difficult to change. 3. monetary policy ’ s rule system experience has shown that more is needed than proud declarations from political decision - makers that they will safeguard a stable value of money and are not prepared to adapt policy to excessively high wage increases. we heard plenty of that in the 1980s. one way of enhancing credibility that has been found to work well and is supported by economic theory is for the democratically elected body to delegate monetary policy to a central bank with a clear, specified obligation to safeguard the value of money. the central bank is given full control over the instruments, principally the short interest rate, for fulfilling the stipulated objective. this arrangement limits both the room for short - run attempts to boost employment and the risk of inflationary mechanisms taking root in the economy. that also lessens the risk of a repetition of what happened in the early 1990s when the inflation bubble burst and unemployment rose. credibility provides greater manoeuvrability it may be worth underscoring that a system