has fallen to 3. 1 per cent, around two thirds lower than its peak. disposals made on the secondary market up until now, along with those that are expected to be completed in the final months of the year, will enable banks to go through with the plans made at the start of 2020, before the outbreak of the pandemic. italian banks are enjoying the fruits of their labours in the management of npls, spurred in part by the regulation and the supervisory activities of recent years. specific structures were created to implement the reduction plans presented to the supervisory authorities ; thanks to improvements in information quality, banks are now able to better assess the actions to be taken, through internal management and selling on the market, to address loan deterioration ; it is therefore possible for potential purchasers to make valuations more accurately and quickly. the breadth and depth of the economic crisis that we are experiencing will nevertheless result in an increase in business insolvencies. our studies indicate that in 2020, the deterioration in their financial situation will lead to a sharp increase in the probability of insolvency : the share of financial debt owed by the riskiest borrowers could exceed 20 per cent, compared with a prepandemic level of 13 per cent. in the coming years, the evolution of firms ’ riskiness will inevitably depend on cyclical developments, which are now extremely uncertain, and on the range and effectiveness of measures that may be introduced to encourage them to reduce their financial leverage. in the next few months, banks will be called upon to do their utmost in that which is the essence of banking : support worthy entrepreneurial projects, recognize without delay any losses arising from exposures that are highly likely to become insolvent, and restructure loans to debtors in difficulty. compared with the past, banks find themselves facing new restrictions, both accounting and regulatory, in recognizing losses and classifying loans. these are obligations 3 / 7 bis central bankers'speeches designed to ensure stable and effective lending ; they are, as is well known, particularly strict in countries such as italy that are characterized by delayed payment of commercial debts and particularly lengthy civil proceedings, although the latter have improved in recent years. in the absence of measures that can make decisive inroads on these fronts, the burden of the restrictions on our country ’ s banks is therefore still greater than the european average. supervisory authorities can take advantage of the room for flexibility to ward off the procyclical effects on credit supply,

ignazio visco : 2020 world savings day address by mr ignazio visco, governor of the bank of italy, at the 96th world savings day ( online event ), organized by the association of italian foundations and savings banks, rome, 30 october 2020. * * * the cyclical situation, savings, and the economic policy response following the unprecedented contraction in the spring, the global economy recorded a better than expected strengthening in the summer. as a result, at the start of this month, the international monetary fund revised its estimates upwards for this year. however, the decline in economic activity is the sharpest since the great depression, with a reduction in gdp in the order of 4. 5 per cent. the intensity with which the spread of the pandemic has picked up again in recent weeks, particularly in europe, and the associated high levels of uncertainty risk producing further slowdowns in production and in the demand for goods and services in the short term, with negative consequences on the outlook for the global economy next year as well. in italy, the return to growth in the third quarter was also much more marked than we had forecast in july. this was due to the strong recovery of the industrial sector, where production in august returned to pre - epidemic volumes. on the other hand, the slowdown in services seems to have persisted, despite the positive trend in holiday spending in the summer, which was mainly of domestic origin. the strengthening of productive activity would not have been possible without robustly expansionary economic policies, which also led to a marked improvement in conditions on the financial and credit markets. nevertheless, the resurgence of the epidemic threatens to undermine the results achieved so far : an increase in cases of infection – even if countered by less drastic measures than those adopted in the spring – risks negatively impacting household and business confidence and consumption. the greater pessimism of consumers recorded since the start of the crisis has led to a considerable increase in their propensity to save. in the second quarter, the ratio between savings and gross disposable income, close to 20 per cent, was almost double its 2019 average, mainly because of the decline in purchases of goods and services following the halt in certain sectors of activity. our estimates suggest, however, that savings have remained high in recent months too, both for precautionary reasons, linked to a decline in disposable income and to fears of job losses, and as a result of the persistent risk of