ignazio visco : launch of the oecd business and finance outlook special address by mr ignazio visco, governor of the bank of italy, at the launch of the oecd business and finance outlook, paris, 24 june 2015. * * * i first wish to thank the secretary general for kindly inviting me here today. the oecd business and finance outlook is a welcome newcomer that complements available analyses on the global economy ’ s macro - financial outlook published by international organizations. it adds, in this first issue, a distinct perspective by bringing together a number of topical issues that define the current situation of very low interest rates. i also like the focus on business investment and its financing channels in the post - crisis environment, and i agree on the relevance of the report ’ s key findings. before learning more details from adrian blundell - wignall ’ s presentation, i would like to offer just a few remarks, not least because the report ’ s starting point – record - low interest rates – is also very much affecting central banks ’ actions in response to the global financial crisis and especially, in the euro area, the sovereign debt crisis. the governing council of the ecb has been confronted with the risks stemming from a prolonged period of exceptionally low inflation, if not outright deflation. these risks are considered particularly high in the current conditions of policy rates at historical lows, possibly marked disanchoring of inflation expectations, and high levels of public and private debt. the response has been to launch an expanded asset purchase programme designed to bring about a sustained adjustment in the path of inflation consistent with the return to price stability, that is an annual growth in consumer prices of below but close to 2 per cent in the medium term. potential repercussions for specific sectors, such as those considered in the new oecd outlook, are not being ignored. there are no signs, for the time being, that low interest rates are provoking generalized imbalances, or that asset and property prices are subject to particular speculative pressures. local and sectoral tensions may occur, but they should be controlled with well - designed macro - prudential measures. moreover, the exposure of institutional investors to a prolonged period of very low interest rates may be significant in some euro - area countries, but it should be limited through better matching between yields and duration of balance sheet assets and liabilities, improved operating results through portfolio diversification, augmented technical reserves, and the adjustment

conditions on current and future inflation. bis central bankers ’ speeches so what have you learned so far? our own experience with a negative deposit rate was more favourable than we initially thought. we then went to minus 0. 20. since then we also have the experience of smaller countries which cut the rates to even more negative levels. we also reopened the discussion on the zero lower bound. there is no decision which has been taken but it is true that, given the experience that we have seen, we thought in the governing council that there was the case to re - discuss the lower bound. have you looked at what other central banks have done? yes but one needs to be very careful when looking at the experience of other countries. each central bank works in a different environment, what you see in a small open economy is not necessarily applicable in a larger zone. could the euro area tolerate minus 0. 75 percent, like, for example switzerland? in terms of level, i wouldn ’ t have any judgement in terms of ‘ they can do it so we can do it ’, that would be too simplistic. you have to look at the specificities of each one. what ’ s your thinking on how to avoid the so - called ‘ cliff effect ’ if qe were to come to a sudden end? we are very well aware of that. i think at some point we will have to clarify, what happens after september 2016 and what happens with what comes to maturity. quite a lot of securities come into maturity into the early years after september ‘ 16, this is something the governing council at some point will have to decide and communicate. some people say the ecb is dominated by the financial sector. i strongly disagree with that, it ’ s more the opposite. since we implemented our forward guidance we have been signalling more of our reaction function. when we talk about our ability and willingness to act under a number of conditions, of course markets incorporate that. what ’ s your view on the need for further monetary policy action now? there will be different views as usual in the governing council, there will be a very good dialogue on the economic assessment. you cannot prejudge at this time the decision on what combination of measures to take or not to take. the staff has also been tasked to look at the impact of all measures on financial conditions, on the economy and on inflation. the governing council will discuss whether there is a case for further action in the context of heightened uncertainty. this