effects and potential side effects – as well as our communication practices. we also assessed the importance of digitalization, financial stability, globalization and climate change from the perspective of monetary policy. needless to say, these themes continue to be important topics for future research. many of these themes will be also addressed at this conference. the most important revision to our strategy is the new definition of our inflation target and how it will be applied in our future decision - making ; that is ( in ‘ centralbankese ’ ) the reaction function. according to the new strategy, price stability is best maintained by pursuing at a 2 % symmetric inflation target over the medium term. the old inflation target of ‘ below, but close to 2 % ’, which was valid until july 2021, was less precise, and open to interpretation. in particular, this former definition had a streak of asymmetry, and the quantification of 2 % may have appeared more of a ceiling than a central target. the new 2 % inflation target is symmetric and unambiguous. symmetry means that the 1 / 3 bis central bankers'speeches governing council considers both slower and faster inflation to be equally undesirable. this change is clearly reflected in our forward guidance. as decided at our monetary policy meeting yesterday, the governing council expects the key ecb interest rates to remain at their present or lower levels until it sees inflation reaching 2 % durably, and it judges that the progress realized in underlying inflation is consistent with inflation stabilizing at 2 % over the medium term. this may also imply a transitory period in which inflation is moderately above target. thus we maintain our very accommodative monetary policy stance, appropriate for the rebounding eurozone economy and the still remaining uncertainties. we also deemed that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases of pepp than in the previous two quarter. in order to assess how much the new strategy is likely to change the ecb ’ s policy preferences, a recent study ‘ reading between the lines ’ by bank of finland staff estimates the ecb governing council ’ s objective function, or loss function. 1 this is done by applying text analysis to extract the tone, or sentiment, from the ecb ’ s introductory statements, and combining this information with the ecb ’ s real time macroeconomic projections. the results suggest that under the now old definition of price stability the ecb ’ s loss function indeed was asymmetric

billion registered during the summer of 2012. the economic picture nevertheless remains fragile. international financial tensions are again threatening global market stability. the italian economy is improving only slowly, with considerable unevenness both geographically and by sector. to maintain the recent positive signs and convert them into sustained, robust economic growth that can cut significantly into italy ’ s high unemployment will require the country to finally tackle and begin solving a series of well - known structural problems on which action has been deferred for too long. another necessity is adequate financial support for firms. there can be no return to growth without the contribution of banks and markets. past efforts to foster the development of a more diversified financial system – one in which the importance of markets and institutional investors is comparable to the other leading countries – have not yielded the hoped - for results. the recession, the increase in credit risk and the resulting credit supply strains have nevertheless created incentives for firms and banks to renew those efforts, to make them more effective and to expand direct finance to the productive economy. in recent months italian firms have shown a greater propensity to turn to the capital market. both bond issues and new stock exchange listings have increased. but market recourse remains modest and for the most part limited to larger companies. small businesses have not taken proper advantage of the opportunities for direct financing. banks can be essential in encouraging direct access to the markets for larger firms and pointing smaller ones in the same direction. if they accompany firms with good growth prospects into the market, developing corporate finance services that take less capital and liquidity, they can curb risks and improve earnings. to attain these objectives they need to strengthen relationships with firms and avoid conflicts of interest. firms too must contribute to the development of the capital market. corporate financing needs cannot be met by bank credit alone. diversifying funding sources will require a commitment to greater accounting transparency, openness to outside parties, and above all capital strengthening. in order to gain the support of banks and investors, entrepreneurs will have to be the first to demonstrate their own faith in the prospects for their business. the task of economic policy is to remove the obstacles, to provide incentives to ensure that the development of the capital market gathers momentum and, above all, that it does not flag as in the past. like the rest of the italian economy, this process would benefit from an easing of the tax burden on firms. bis central bankers ’ speeches figure 1 bank loans to firms in the main euro - area countries ( as a percentage of