##4. the ecb governing council intends to reduce 1 / 4 bis - central bankers'speeches reinvestments by €7. 5 billion per month over the second half of the year, before discontinuing them from the end of 2024. over the next few months, reinvestments will continue to be made with the flexibility required to counter risks to the monetary policy transmission mechanism. the amount of funding granted to euro - area banks through eurosystem refinancing operations continued to fall significantly, from €1, 324 billion at the end of 2022 to €410 billion at the end of 2023. the decline was mainly due to the repayments of maturing third - series targeted longer - term refinancing operations ( tltro iii ), combined with voluntary early repayments driven by the change in funding conditions, which have been less favourable to banks since november 2022. the balance sheet at the end of 2023, the bank of italy's balance sheet assets stood at €1, 253 billion, down by €223 billion from 2022. the balance sheet reduction is set to continue in the current year as a result of maturing tltro iii operations and of the ecb governing council's decisions to discontinue the reinvestment of maturing securities. on the asset side, just as for the other national central banks of the eurosystem, the decline was mainly due to refinancing operations, down from €356 billion to €150 billion. securities held for monetary policy purposes also declined, though to a lesser extent : at the end of 2023, they amounted to €657 billion ( €39 billion less than in the previous financial year ), with italian government bonds accounting for around €600 billion. on the liability side, there was a decline both in deposits held by banks, which fell by €57 billion, and above all in the bank's negative target balance, down from €684 billion to €521 billion. the sizeable reduction in the latter was largely due to net purchases of italian securities – mostly public sector securities – by foreign investors, and to an expansion in italian banks'net funding on international markets. these liquidity inflows were partly offset by italian residents'investment in foreign securities. the disbursement of the third and fourth tranches of recovery and resilience facility funds to the italian state through the target

fabio panetta : overview of economic and financial developments in italy address by mr fabio panetta, governor of the bank of italy, at the ordinary general meeting of shareholders, rome, 28 march 2024. * * * ladies and gentlemen, the global economy remains weak. sluggish international trade and the uncertainty raised by geopolitical tensions are weighing on economic activity. the restrictive monetary policy of the european central bank ( ecb ) is dampening demand and is contributing, together with falling energy prices, to a fast decline in inflation. risks to price stability have subsided and the conditions for starting monetary easing are taking shape. as i will explain shortly, the implementation of monetary policy aimed at price stability is reflected in the bank of italy's 2023 annual accounts, which are submitted to you for approval today, and will continue to affect profitability in the near future. * * * i would like to take this opportunity to thank my predecessor ignazio visco once again for his service to the bank of italy, as we did at the symposium held recently to express our appreciation and to celebrate his two mandates at the helm of the bank. i would also like to extend my warmest wishes to piero cipollone, former deputy governor of the bank of italy, who was appointed to the ecb's executive board last november. he has been replaced on the bank of italy's governing board by chiara scotti, former senior vice president and director of research at the federal reserve bank of dallas. monetary policy and its impact on the bank's annual accounts the eurosystem central banks have purchased a large amount of securities in recent years in order to ensure that inflation returns to 2 per cent over the medium term. with the rise in inflation, the ecb governing council began to tighten its monetary policy in july 2022. it stepped up these efforts in the first nine months of 2023, raising its key interest rates by 200 basis points overall, to 4. 5 per cent on the main refinancing operations, 4. 75 per cent on the marginal lending facility, and 4 per cent on the deposit facility. the governing council has kept the policy rates unchanged since last october. the reinvestment of securities held for monetary policy purposes under the asset purchase programme ( app ) was discontinued in july 2023. maturing securities under the pandemic emergency purchase programme ( pepp ) will instead continue to be fully reinvested through the first half of 202