cent in november 2011 to about 55 per cent in september 2013. the unfavourable macroeconomic conditions continue to restrain credit demand and supply ; loan supply is affected by the increase in firms ’ credit risk and the related adverse selection effects. italian firms ’ financial leverage is high by international standards : in 2012 the ratio of financial debt to the sum of that debt and shareholders ’ equity at market prices was 49 per cent in italy against 34 per cent in france and the united states, 39 per cent in germany and 42 per cent in the united kingdom and in the euro area as a whole. analyses of firms ’ financial statements indicate that these differences are due only in part to dissimilarities in sectoral and size composition. italian households invest only a small amount in listed shares ( 2 per cent of their total financial assets, against 4 per cent in germany and on average in the euro area ). only a small proportion of italian investment funds invest widely in shares. the current financial situation should spur banks and firms to overcome this state of affairs. difficult credit conditions necessitate recourse to alternative channels of funding for sound businesses with good growth prospects. by providing the necessary services to accompany these businesses on the capital markets, the banks can sustain their own earnings and at the same time reduce their risks, although conflicts of interest must be avoided. bis central bankers ’ speeches inflows of foreign capital could help to improve firms ’ funding conditions. after the substantial outflow between the summer of 2011 and the first four months of 2012, foreign portfolio investment is picking up ; the easing of financial tensions, assisted by the unconventional monetary policy measures taken by the eurosystem, has contributed to this. the maintenance of balanced public finances and the continuation of reform actions to support growth – accompanied by progress towards the completion of the european union – can improve confidence and reduce the perception of investment risks in our country, allowing us to consolidate the recovery of capital flows from abroad. the italian banking system italian banks have weathered the global financial crisis, a double - dip recession, and the sovereign debt tensions. the capital strengthening carried out in the course of the last, difficult years has been substantial ; in italy, unlike other countries, it was achieved virtually without recourse to public funds. for the system as a whole, between the end of 2007 and june 2013 core tier 1 capital increased by €39 billion, to almost €180 billion. the core tier 1 ratio accordingly rose from 7. 1 to 10

. ludek niedermayer, deputy governor of the czech national bank, will first explain to you “ why and how ” inflation targeting was adopted in the czech republic – the first country to embrace this regime in our region. then, it will be for ms csermely agnes, director with the national bank of hungary, to share with us the “ lessons and challenges ” put forth by the hungarian experience with inflation targeting. our last speech for this event will be held by mr. cristian popa, deputy governor of the national bank of romania, showing you just where we, as central bank and as economy, stand in the preparation of the introduction of inflation targeting. what i do want to mention is the current debate on the appropriateness of adopting inflation targeting in romania. i am very happy that monetary policy steals the spotlight from football, at least temporarily. some acknowledged romanian economists claim that inflation targeting is not needed since future euro adoption requires fulfilling the grueling conditions of the erm - ii framework. in line with this argument, the exchange rate might prove to be a better choice for a nominal anchor. given the soon to be completed capital account liberalization, i believe that exchange rate management would be very difficult outside a currency board. although i am confident about our option, i respect all disagreeing opinions. for those retaining their doubts about the benefits of inflation targeting, there is one more argument, courtesy not of a renowned economist, but of the danish physicist niels bohr. when asked why he, an enlightened scientist, kept a horse - shoe on display in his house, his prompt answer was that “ it helps non - believers too ”. likewise, provided that the national bank of romania has convinced enough people of its commitments, non - believers should also enjoy the benefits of this policy change. ladies and gentlemen, let me now introduce rachel lomax, deputy governor of bank of england and member of the monetary policy committee. before passing on the floor, i would just like to mention that mrs. lomax has previously visited romania. ten years ago mrs. lomax was negotiating development programs in romania on behalf of the world bank with a team including myself and some other people in this audience. she is now here again to assist us in preparing to achieve another goal related to romania ’ s development, that of lasting price stability.