billion compared with 2018, reaching €107 billion. in line with eurosystem accounting rules, this appreciation is not recorded in the profit and loss account and therefore did not affect the bank ’ s operating result, as it was reflected in a corresponding increase in the revaluation account on the liabilities side. address by governor ordinary general meeting of shareholders banca d ’ italia investment assets, amounting to €140 billion, consist mainly of bonds and, to a lesser extent, equity shares. since last year, the bank has modified its investment strategy, integrating environmental, social and governance ( esg ) factors into the management of its equity portfolio. shares of companies that operate mainly in sectors not compliant with the principles of the un global compact have been excluded, those of companies with the highest esg scores favoured. the bank is already looking into extending this new investment strategy to corporate bonds as early as this year. on the liability side, the bank of italy ’ s negative balance on the target2 payment system declined for the first time in five years, from €482 billion to €439 billion over the course of 2019. the decrease occurred primarily in the second half of the year, initially as a result of the inflow of capital from abroad, mainly owing to higher demand for italian government securities, and thereafter due to the net foreign funding by italian banks, driven by the eurosystem ’ s new system for banks ’ reserves remuneration, which was also reflected in the increase in deposits of credit institutions ( from €89 billion to €102 billion ). finally, the value of banknotes in circulation continued to increase : reported in the bank ’ s balance sheet in proportion to its share in the ecb ’ s capital key, their value increased by €4 billion, reaching €202 billion at the end of 2019. profitability, risks and organizational measures the gross profit for 2019, before taxes and transfers to the general risk provision, was equal to €10. 8 billion. the €2 billion increase over 2018 is mainly attributable to income components that may not recur to the same degree in the future. in particular, the positive performance of the stock markets in 2019 – accompanied by the bank ’ s extensive rebalancing of its portfolio to integrate esg factors – led to a reduction in write - downs and to a marked improvement in realized gains from trading operations. net interest income, which is central banks ’ traditional source of income

bank steps in. other issues, which i have not had time to touch on today, but are no less important, are of a legal nature. can a central bank issue a new form of currency without explicit authorization by the government? if the cbdc is legal tender, does this mean that everybody will need to have the technical means to accept it? in many countries new laws may be required before any concrete steps towards a cbdc are taken. for a central bank, issuing a digital currency is like travelling in a new land : the path to take will be chosen at the same time as the map is drawn. the many uncertainties involved will undoubtedly make the journey exciting and full of discoveries, though a substantial amount of prudence and wisdom will still be required. all in all, this is hardly going to be a purely technical decision. society as a whole, through its political bodies, will need to be involved. whether central banks should issue digital currencies – and with what characteristics – remains an open question and i look forward to hearing the views that will be presented today. i remain convinced that physical cash will continue for quite some time to be part of the payment system. it is hard to dispute that money is probably one of the most important and useful social constructs, one that has been with us for around 3, 000 years 24 and is still very much in use. cash is by far the dominant means of payment, both in the euro area 25 and elsewhere, 26 and demand for it has been on the rise in most advanced economies in the last decade. currency in circulation in the euro area amounts to around €1. 1 trillion, and has recorded steady growth rates in recent years. coins and banknotes have proven to be a resilient technology, it may be too early to call for their complete retirement. see, for instance, robert a. mundell, ‘ the birth of coinage ’, columbia university, mimeo, 2002. esselink henk and lola hernandez ( 2017 ), ‘ the use of cash by households in the euro area, ’ ecb occasional paper series 201 / 2017. available at http : / / www. ecb. europa. eu / pub / pdf / scpops / ecb. op201. en. pdf. bech, morten linnemann, umar faruqui, frederik ougaard and cristina picillo ( 2018 ), ‘ payments are a - changin'but cash