by bank of bis central bankers ’ speeches italy staff. in addition to revealing unauthorized share buy - backs by popolare di vicenza, it highlighted a further problem with the funding of the shares issued in recapitalizations : the bank had not deducted from the supervisory capital the funds raised against the substantial loans it had disbursed to subscribers of its shares, as instead required by prudential regulations. already after the initial findings of the inspection the bank had been called on to take corrective measures, including a virtually complete change of management. once the inspection had been completed the bank was ordered to restore capital adequacy buffers to regulatory levels, draw up a new business plan, and strengthen its organization and internal control functions. in accordance with the new business plan, the bank then passed a resolution approving a comprehensive plan to strengthen its capital and radically overhaul its governance, including its transformation into a joint stock company, now completed, a €1. 5 billion capital increase, and stock market listing. in the case of veneto banca, an inspection carried out in 2013 found major anomalies of a technical and administrative nature, highlighting the practice of disbursing loans to customers against purchases of the bank ’ s own shares, which were then not deducted from supervisory capital. we did everything in our power : prohibited the bank from disbursing new loans to corporate executives ; called a meeting of the board of directors to examine the bank ’ s overall situation and pass the appropriate resolutions ; read out to the meeting of shareholders the official request for action to ensure that it was aware of the bank ’ s situation and of the measures taken by the bank of italy ; and imposed fines on the persons responsible. at the same time, where it was not in our power to intervene directly, we used strong moral suasion, calling on the bank to replace all of its management boards and to plan a merger at the earliest opportunity. the bank ’ s response at the time was unsatisfactory. it did not make all the required changes to its governance and continued to engage in conduct contrary to the principles of sound and prudent management, such as granting loans to subscribers of the capital increase made in 2014, which emerged in the course of the follow - up inspection in 2015. because of the consequent reduction of supervisory capital and further rapid deterioration in the quality of assets, the situation could only be remedied through a €1 billion

policy measures adopted between june 2014 and december 2015, both annual inflation and gdp growth in the euro area would have been lower by about half a percentage point in 2015 – 17. the expansion of economic activity in 2015 would have been slightly below 1 per cent, against an observed 1. 6 per cent ; inflation would have been negative, at about – 0. 5 per cent, against 0. 0. 5 these estimates are consistent with those of the eurosystem and the ecb staff. 6 regarding italy, the effects are estimated to be somewhat stronger : absent the monetary impulse, the italian recession would have ended only in 2017 ; inflation would have remained negative for the whole three - year period. 7 13. the commitment to pursuing the objective of price stability shown by the governing council has been essential for stemming the de - anchoring of expectations and maintaining the ecb credibility, which is crucial to avoiding the risk of a deflationary spiral. when inflation remains far from target for a prolonged period, the risk of deanchoring may be compounded by economic agents revising their expectations for future inflation to take account of surprises registered in the past, to an extent that also depends on the share of agents that lose their trust in the central bank ’ s objective. 8 14. in order to bring inflation back to target, it is essential to support aggregate demand. the unconventional measures adopted by the governing council of the ecb are contributing to increased spending on consumption and investment goods. and i am confident that the effects we have observed so far will be strengthened by the new decisions we took on 10 march : the strengthening of the app and the inclusion of corporate bonds, together with the introduction of new targeted refinancing operations, will contribute to a further decline of the cost of borrowing in the private sector. 15. a recent debate has centred on the notion of “ helicopter money ”. obviously this is a “ very unconventional ” policy, targeted at directly affecting consumption and investment by households and firms. such an extreme measure would undoubtedly be subject to operational and legal constraints ; the redistributive implications and the close ties with fiscal policy would all make it very complex, all the more so in the euro area given its institutional framework. as recently noted by president draghi, and reiterated by benoit cœure and peter praet, helicopter money is not currently part of the discussion in the governing council, although no policy tool within our mandate can or should be dismissed a priori. 16