in vat receipts in the first few months of the year. this downward revision has been largely offset by upward revisions for the other components of revenue. the new estimates on a current legislation basis also take account of the effects of decree law 93 / 2008, which was approved in may and reduced both revenue and expenditure by €2. 3 billion. the decree law abolished municipal property tax on primary residences ( with a decrease in revenue of €1. 7 billion according to the official estimates ), reduced the taxation of overtime earnings and productivity bonuses ( €0. 7 billion ), and made numerous cuts in spending appropriations, above all in relation to capital expenditure. larger transfers from the central government will compensate municipalities for the loss of revenue from municipal property tax. the change to that tax and the suspension, likewise provided for in decree law 93 / 2008, of the power of local government bodies to raise the rates of the taxes within their competence entail a reduction in their degree of fiscal autonomy. the abolition of municipal property tax on primary residences pursuant to decree law 93 / 2008 comes on top of the reliefs already introduced by the finance law for 2008. according to the information contained in municipalities ’ outturns, about 5 per cent of their total budget revenue came from municipal property tax on primary residences. the impact of the abolition appears to be greater for larger municipalities, for those located in ordinarystatute regions and, among the latter, for those of the centre and north. the decree law provides that earnings from overtime or deriving from other variable components of compensation are subject to a substitute tax of 10 per cent, up to a maximum of €3, 000, and are not included in total income for purposes of personal income tax. the relief is reserved, at least initially, to private - sector employees who in 2007 had payroll earnings of not more than €30, 000 and will apply to wages and salary payments received in the second half of 2008. in the second quarter of 2007 about 10 per cent of employees worked overtime, for a number of man - hours equal to 2 per cent of total hours worked. the frequency of overtime work is highest among employees of medium - sized and large industries in the north, males and workers with relatively high educational levels and job qualifications. the expenditure savings derive from the cancellation of numerous appropriations for minor measures ( about €1 billion, including €0. 4 billion of current expenditure ), from the reassignment to the state budget of the funds that fintecna was

anna maria tarantola : strengthening financial stability – the contribution of deposit insurance speech by ms anna maria tarantola, deputy director general of the bank of italy, at the conference on financial stability and the contribution of deposit insurance, rome, 30 september 2010. * * * good morning. i would like to welcome all of you to the bank of italy. we are very pleased to be able to host this year ’ s conference on financial stability and the contribution of deposit insurance. 1. the eu banking sector after the crisis three years after the onset of the financial crisis, the eu banking system has made important strides. these have been a long and difficult three years, but positive signs are evident. in the first half of 2010, profits rose at the major eu banks. in some cases income was significantly higher than in 2009 ; other banks reporting negative results last year have now returned to profitability. loan impairment and bank provisions were reduced, as the recovery in the real economy gained momentum. the eu - coordinated stress tests published in july showed that banks have strengthened their capital base and are in a position to bear additional losses should the macroeconomic outlook deteriorate. however, despite these positive trends, considerable uncertainty still surrounds the banking sector. credit risk remains high and if, as recent signs indicate, the international recovery decelerates, credit risk could increase further. while moderate economic growth remains the most likely scenario for europe, it remains vulnerable to a moderation in international trade. it is also not ensured that bank earnings will continue to be as sustained as in past months when they were supported by factors that may prove to be temporary : trading profits have been falling ; and net interest income, though still strong, could be negatively impacted by a sudden flattening of the yield curve. especially worrisome are risks stemming from the interplay between sovereign debt problems and fragility in the banking sector ; these are particularly acute in eu countries with large fiscal imbalances. in past months, we saw budgetary pressures having dramatic spillover effects on bank funding in some countries ; at the same time, signs of instability in the banking sector had negative repercussions on sovereign issuers. bank refinancing is another major concern. eu banks will soon need to begin rollingover very large amounts of debt. given that public - sector requirements will also be rising, access to market funding could become even more difficult. in fact, we are observing greater polarisation among banks. stronger institutions can