to overcome their heavy reliance on bank credit. the business sector needs to find other means of financing investment. on the other hand, it is in the banks ’ interest to keep a balance between loans and deposits, and to share with the markets the risks of lending to customers. helping businesses access the capital markets is not an easy task for the banks, requiring the ability to assess firms ’ economic and financial prospects ; care must be taken to avoid potential conflicts of interest. our supervision, conducted both off - site and on - site, reflects our concern for the trends in lending and credit quality. its purpose is to make sure, in particular, that impaired loan coverage ratios are adequate, and are increased whenever necessary. far from damaging the banks, it helps to strengthen them, reassuring the markets as to the quality of their assets. the findings of the inspections carried out between the end of 2012 and the early months of this year are set out in a report published on our website. we are verifying that the corrective measures, including organizational ones, which the banks were asked to take have been promptly put in place. meanwhile, work to verify the adequacy of coverage ratios continues, in some cases also taking in the whole credit portfolio. the opinion, voiced repeatedly during the crisis, that italy ’ s banking system stands in dire need of recapitalization is unfounded. only a few days ago the international monetary fund published the results of its periodic financial sector assessment program for italy. it acknowledges that the italian banking system has managed, overall, to weather the doubledip recession and the sovereign debt tensions, extending its solid deposit base and strengthening its capital. unlike other countries, it has succeeded, notwithstanding the difficult conditions, in raising additional funds almost entirely on the capital market, without burdening public finances and heightening sovereign risk. the banking system ’ s resilience was aided by a model of supervision, regarded by the imf as a pillar of financial stability, which adheres closely to established international standards and is based on intense and strict oversight. the imf also recommended that steps be taken to improve the effectiveness of supervision in some specific areas : transactions with related parties, the requirement for shareholders and corporate officers to act honourably and professionally, and the power to impose corrective measures such as the removal of company directors and executives. the crisis management and resolution system has been effective, making it possible to address the effects of the crisis without affecting the stability of the system. the im

. the transition plans of financial intermediaries ( banks and institutional investors ) can represent a powerful tool both for managing climate risks and for steering the economy on a sustainable path. however, we are moving our first steps in this area. in what follows i will discuss two issues and draw some conclusions. 2. current vs expected emissions an intermediary can implement a net zero transition plan in many ways. to simplify, consider two opposite alternatives. the first would entail changing the composition of its portfolio by moving from high to low carbon intensity sectors / firms, identified based on their current emissions. this is the so - called “ exclusion ” strategy, according to the usual taxonomy of sustainable investment. 4 the second ( the so - called “ best - inclass ” strategy ) would entail overweighting firms that, despite being carbon intensive, have committed to an ambitious and credible decarbonization plan over the coming decades. the first approach, if applied on a vast scale, would suffer from a fallacy of composition : it would be feasible for the individual intermediary, but not at the aggregate level, short of a “ miracle ” in the form of a technological breakthrough allowing carbon intensive firms to transition without financial support, or a quick and radical change in households consumption patterns that causes a fall in demand for high carbon products and services. the second approach avoids this problem and appears capable of providing carbon intensive firms the finance they need to implement their transition plans. figure 1 reports data for eu listed non - financial companies, aggregated by sector. for each sector, the horizontal axis measures the current carbon intensity ; the vertical axis reports the expected decline in carbon intensity over the next decade, as envisioned in each firms ’ published commitments. the figure shows that firms in the more carbon intensive sectors plan to reduce their emissions relatively more aggressively. this suggests that these firms, arguably the most exposed to transition risk, will need substantial flows of finance in the coming years for their transition plans to succeed. the figure also highlights that financial firms could face a difficult choice : in the short - to - medium term financing the transition might even entail an increase in the carbon footprint of their portfolios. while this might seem at odds with a net zero pledge, it could be worth doing. consider e. g. firms operating in the business of power generation, often characterized by very high emissions. their investment choices will global sustainable investment alliance ( 2021 ), “ global sustainable investment review ”. be key to