the highest degree of professionalism and a strong sense of responsibility. it is no mere formality that i express, personally and on behalf of the governing board, a profound appreciation of their dedication. bis central bankers ’ speeches the monetary policy response to the risks of deflation notwithstanding signs of strengthening in the first quarter of this year, the euro - area economy remains exposed to global risks. trade continues to soften, and uncertainty persists regarding the ability of china and other emerging countries to avoid a sharp slowdown of their economies. in the euro area, domestic demand needs to consolidate further in order to counter the slackness of foreign demand. concerns about the prospects for the european banking system continue to afflict the markets, heightened by uncertainty concerning the macroeconomic outlook, the regulatory stance, and the as yet incomplete configuration of banking union. in some countries, the problems of the economy and public finance are interwoven with those of political instability ; in many, hostility to the european project is gaining traction. a negative outcome of the referendum on the united kingdom remaining in the european union could engender profound instability. for monetary policy, the main challenge remains the persistence of excessively low inflation, which turned negative in the first few months of this year. this phenomenon is not limited to the euro area. in large part it stems from the fall in oil prices, but it also depends, to a significant extent, on internal dynamics : the margins of unused plant capacity and available labour are wider than in other advanced economies. as i have recalled on several occasions in recent years, like excessively high inflation, an overly subdued price dynamic is also harmful for economic and financial stability, especially when public and private debt are high and growth is weak. resolute action is being taken to dispel the risk of a prolonged detachment of inflation expectations from the level consistent with the central bank ’ s objective. in the euro area, the responsiveness of longer - term expectations to the fall in short - term expectations, which is very modest under normal circumstances, remains pronounced, albeit less so than between the end of 2014 and the start of last year. we have acted with determination to encourage the return to price stability ; as reiterated by the governing council of the ecb at its last monetary policy meeting, in furtherance of this objective we will continue if necessary to deploy all the instruments made available to us in our mandate. official interest rates have been reduced repeatedly, bringing the eurosystem ’ s deposit facility

##lli, “ relationship and transaction lending in a crisis, ” the review of financial studies, 29 ( 2016 ), 2643 – 2676. level, this aim is being pursued by implementing the capital markets union project : enriching the types of financing available to non - financial corporations, broadening the portfolio choices of investors, enhancing the efficiency of financial intermediation, removing barriers to cross - border investment, and increasing funding options for smes and infrastructure. in italy, a number of additional initiatives with similar goals have been taken in recent years, such as minibond issues, debt funds, tax incentives for venture capital and allowances for corporate equity. yet in italy, as well as in many other european countries, the role played by the financial markets and non - bank financial institutions is still limited. this is why i am looking forward to discussing these issues with our eminent experts. designed by the printing and publishing division of the bank of italy