associazione bancaria italiana unione bancaria e basilea 3 – risk & supervision 2017 the italian banking system and the exit from the crisis speech by the deputy governor of the bank of italy fabio panetta rome, 14 june 2017 the economic situation and outlook growth in the euro area is firming up, driven by the accommodative monetary policy stance and increased international trade. in italy the recovery has been under way for more than two years and is taking hold. recently released data from istat indicate that in the first quarter of this year gdp grew by 0. 4 per cent, pushed up by household consumption and firms ’ inventories. investment, which had been accelerating strongly since the start of 2016, slowed, but this should only be temporary. our analyses suggest that firms will expand their production capacity once again in 2017. after the sharp increase at the end of last year, exports are continuing to grow in parallel with world trade. the recent positive performances are partly unexpected and must be analysed carefully ; they will have to be confirmed in the months to come. they are, however, consistent with improvements in the labour market. although excess labour supply depresses wage growth, the number of people in employment continues to increase, with an acceleration in april, and this despite the termination of the incentives for hiring new employees on permanent contracts. inflation is rising but its core component remains weak. similar developments can be seen in the euro area. although the risks of deflation have declined, upward pressures on prices have not emerged to the extent that they are self - sustained in the medium term or that justify a revision of the monetary policy stance. the outlook for the italian economy is favourable. in the forecasts published last week, we calculated that gdp could grow by 1. 0 per cent in the current year and by 1. 2 per cent in the two following years. the national accounts data released a few days ago ( and not included in our forecasts ) suggest higher growth at the end of the first quarter, which would raise gdp growth, other things equal, to 1. 3 per cent on average in 2017. the gap between italy and the other euroarea economies should continue to narrow. the banking system has almost completely adapted to the new economic environment and to the comprehensive regulatory reform that followed the crisis. there are important open issues that require the banks and the authorities to be fully committed. after going through an unprecedented recession and setting out on a path of

management, not ordinary people with deposits in banks. and finally it means making sure that if you take out an insurance contract, it will pay out if whatever you are insuring against happens. the work that the bank does in all of these areas can ultimately be summed up very simply : we maintain confidence in money. this confidence is not, though an end in itself ; it is a means to an end. confidence in money provides the foundations for prosperity. without it, companies would struggle to provide the goods and services we all use every day ; you would face difficulties in knowing how to invest for your futures, be it financing studies or buying a house. maintaining this confidence is the best contribution the bank of england can make to the good of the people of the united kingdom. all speeches are available online at www. bankofengland. co. uk / speeches building public understanding of what the bank does – by engaging with people directly – is essential to our work. that ’ s because our policies work better if our objectives are clear and the british people have confidence that we will do the right thing whatever happens. improving understanding of the bank ’ s role is also part of being accountable to the people we serve. the bank is at the heart of the uk economy. the responsibilities parliament has given us are wide - ranging and the decisions we take affect everyone in the country. people deserve the information and tools to judge how well we are doing our job and to know that we are listening to your views. today ’ s event is also part of a wider effort by the bank to move beyond traditional modes of communication to speak more directly to the people we serve. while three hundred thousand people read the financial times, there are 30 million facebook users in the uk. and while everyone knows it is good to talk, the bank is learning how it can also be good to tweet – our twitter account has 227, 000 followers, though that still leaves us a little behind wayne rooney ’ s 16. 7 million. we are revamping our publications to make them more accessible, using icons and graphics to convey our messages on webpages designed for mobiles and tablets, rather than relying only on pages of words on paper. you can take a look at our first example of this – the november inflation report – online, at www. inflationreport. co. uk. this afternoon ’ s event will showcase a selection of the materials we are planning to run alongside these changes in our communications