bank of italy does not allow banks to make early redemptions of capital instruments without a plan for their replacement with resources of equivalent quality and quantity. the quality of the italian banks ’ capital is high by international standards. we are also aware that the rigour with which we evaluate the inclusion of financial instruments in regulatory capital has appeared, in the past, to put italian banks at a disadvantage with respect to the situation in other countries. we deliberately maintained this policy, even when the market seemed to tolerate particularly high levels of risk. these practices, these evaluation criteria, which have been put to the test in the last two years, have so far brought benefits to banks, the economy, and the public finances. liquidity the system ’ s liquidity is still guaranteed by the massive injections of funds from the central banks. the oversight policy we introduced in 2007 has helped italy ’ s banking system to weather the severe strains of the last part of 2008 without major shocks. we continue to ask the banks to ensure that foreseeable outflows are covered over a broad range of maturities. the tools of analysis and intervention are being continually improved. the ten leading italian banking groups were asked to conduct a liquidity stress test, the results of which have shown that the largest groups have a high resistance to stress. in international cooperation fora, work is under way to draw up common safeguards against liquidity risks. the bank of italy favours a system based on two instruments : on the one side, the requirement permanently to keep sufficient liquid reserves to ensure that, even in the presence of stress, outflows are covered for an adequate period of time ; on the other side, the maintenance of a minimum structural equilibrium between the duration of liabilities and that of assets. opinion is broadly converging on these positions. the one - year financing operation recently conducted by the eurosystem has achieved records both in the number of counterparties ( 1, 121 ) and in the amount allotted ( more than €442 billion ). the participation of italian banks amounted to less than 3 per cent of the total. stress testing bank assets for the quality of loans, and more generally of bank assets, thorough stress testing, performed in a coordinated manner under the guidance of the supervisory authorities, is likewise essential in order to verify the soundness of the single banks and of the system as a whole, to improve the transparency of their balance sheets, and to restore the credit circuit to normal operation. in the

united states, in the weeks immediately following the publication of the stress test results the 19 banks concerned were able, in part by selling non - strategic assets, to raise almost $ 65 billion of new equity capital and issue over $ 20 billion of bonds without government guarantee. the effect spread to all the us banking sector, which jointly placed almost $ 90 billion of new shares in the quarter just ended. ahead of a similar coordinated exercise planned at the european level, in recent weeks we completed a stress test of the italian banking system by estimating the loan losses that would occur in the period 2009 - 10 in even more unfavourable macroeconomic conditions than the present ones : the portion of losses not covered by operating profit would equal about one fifth of the system ’ s end - 2008 excess capital ; overall, the outcome confirmed banks ’ capital adequacy. for the time being, the diversity of intermediaries, methodologies that are still too varied, and difficulties in comparing results make it impracticable to publish the individual results of the stress tests under way at european level. i believe, however, that this objective cannot be deferred for long without delaying the necessary return of banks to the private capital market. good rules, the right incentives banks ’ governance rigorous risk management, the safeguarding of banks ’ reputations, the verification of correct conduct and compliance with the rules require reliable and effective systems of corporate governance and internal controls : these, even before the bank of italy ’ s supervision, are the first line of defence for the stability of banks and the system as a whole. last year we issued rules with which banks had to comply by 30 june, where appropriate by amending their bylaws. bylaws require our approval ; the interaction with banks has been intense. while respecting every bank ’ s autonomy in choosing its own model of governance, we stressed the need for consistent and uniform approaches, clear rules, and a proper balance of power. we called on banks to simplify their governance structures by limiting the number of directors, avoiding overlapping tasks and administrative bodies. we asked that the chairman act as coordinator and guarantor in a dialectical relationship with top management and laid down the conditions for his correct activity within the executive committee, whenever this was established. for the first time, we requested the inclusion of independent members on the boards of directors of unlisted banks. owing to the distinctive traits of the shareholder base and governance structures of cooperative banks, we paid special