worried. but the current level is good for growth in the euro area. how big are the problems in italy, in your view? financing conditions there have tightened. short - term rates have remained low, but longer - term rates have risen considerably, and stocks are under pressure – especially those of banks, which have fallen by more than 30 %. banks will eventually have to pass on the tighter conditions they are facing to customers. our estimates show that this will offset – possibly more than offset – any positive impact resulting from higher government spending. is there a risk of recession? italy ’ s current financing conditions are much too tight for a country with weak growth and low inflation. italy needs supply - side reforms to improve productivity. the european commission has always been relatively open to the idea of allowing higher government spending in the event of such measures being taken. but we have not seen much happening on that front – it ’ s mainly about higher spending. and this has led to much higher risk premia that if protracted, would, in my view, have detrimental effects on the economy. could there be a situation where the ecb would have to intervene? we conduct monetary policy not for individual countries, but for the euro area as a whole. italy is a large economy, but so far there have been no real contagion effects for other countries. financing conditions in the euro area as a whole remain very good. and so our monetary policy assessment is unchanged for the time being. 2 / 4 bis central bankers'speeches so does that mean in other words that the ecb would step in if contagion effects occurred? we would have to analyse the situation. the appropriate instrument would be what ’ s known as outright monetary transactions. under this programme, the ecb would make targeted purchases of the relevant country ’ s sovereign debt subject to certain conditions. but we would not even contemplate this move unless that country applies for assistance from the european stability mechanism, the esm rescue fund, and accepts its conditions. at present, however, people are also speculating about new targeted longer - term refinancing operations, or tltros, for banks. might this not lead to misunderstandings, as it seems reasonable to assume that these operations are motivated by a desire to support italy? the tltros are a monetary instrument and we conduct monetary policy for the whole euro area. we carried out tltros for banks in 2014 and 2016 in order to shore up weak lending

is in favor of the establishment of such a body that would make decisions on interest policy and would also bear responsibility for it. the establishment of such a council is desirable as part of a system of checks and balances for an independent central bank. at the same time the tremendous importance of the creation of a mechanism to ensure the appointment of the most suitable people to the council must be borne in mind : they must have no axe to grind, and cannot come from the business sector, government, or politics. turning to the issue of transparency and reporting, the bank of israel already publishes a half - yearly inflation report which explains the interest policy to the public, its results, and the implications of the developments during the previous half year, and describes the policy likely to be adopted in the future. the bank of israel continues to cooperate fully with the prime minister's office and the ministry of finance in discussions devoted entirely to the drafting of the new bank of israel law. this legislation, firmly founded on the principles outlined above, will propel israel and its economy further along the path towards joining the family of modern countries and economies. the importance of this for israel lies in its ensuring the existence of a proper framework for the government and the bank of israel to operate macroeconomic strategy intended to create long - term growth and employment as a sine qua non for raising residents'standard of living and level of welfare. such a strategy will provide the necessary resources and the correct framework for promoting a welfare policy for the weaker sections of the population that will not leave them out in the cold. to summarize : the bank of israel today has in practice a not inconsiderable degree of independence. this independence derives from changes in economic thinking and in experience gained in setting and implementing interest policy both in israel and world wide. the legal environment in which the bank of israel operates, however, is outdated and should be amended to make it compatible with the new reality. if we enact a new central bank law here in israel, we will join the many countries that have done so successfully.