take today set an important precedent for how map will work and how it will be expected to work in the future. accordingly, i submit that being transparent on the logic behind map initiatives and making sure that that logic is consistent with our agreed principles, is at least as important as getting the details of any specific intervention right. the costs of setting a bad precedent or weakening the credibility of map, and particularly of its countercyclical nature, are hardly quantifiable, but i suspect that they would be very high indeed. the only way to contain them is to make sure that our decisions – whatever they are – derive from first principles, rest on sound economic analysis, and represent the outcome of a transparent, open dialogue among the authorities. benefits for ipos and new equity issuance, as well as non - pecuniary incentives to stimulate issuance of bonds and equities by non - financial companies. a similar story is formalised by bebchuk and goldstein ( 2011 ). note that in this case map can have a role to play ex post, after the burst of a credit bubble, for exactly the same reason why it has one ex ante, in the buildup phase : it corrects externalities ( a strategic complementarity ) that could otherwise bring about suboptimal equilibria. bis central bankers ’ speeches 6. from theory to practice speculating on the interactions between mp, map and mip in abstract is one thing. bridging the gap between theory and practice, and setting up mechanisms that run reasonably smoothly, is another. like many other central banks in the euro area ( and beyond ), the bank of italy has a micro ( mip ) supervisory function that coexists with its macro ( mp ) function. 24 this coexistence requires two elements. the first one is a protocol that regulates the bottomup flow of information and allows the board to form a consistent view of the state of affairs and of the related risks. the second one is a mechanism that defines the top - down transmission of decisions, assigning clear responsibilities to all the sub - structures involved in implementing any policy interventions agreed by the board. seen through a financial stability - map lens, the information flow within the bank of italy can be divided into three phases. first, risks are examined separately by the areas with the relevant expertise. micro risks relating to banks ’ balance sheets are examined by the supervisory directorates ; risks relating to money markets

the european regulations, the action of all the authorities must aim to preserve the value of the banking business to the benefit of savers, employees and the companies to which they lend. in the absence of these conditions, the vulnerability of the banks in crisis will increase, as we have seen in practice. the difficulties that preceded the agreement on the precautionary recapitalization of banca monte dei paschi di siena and the long and troubled discussions involving banca popolare di vicenza and veneto banca are not due to financial constraints, since the resources earmarked by the italian government are much greater than those needed to restructure these banks. the difficulties stem from regulatory obstacles, which can and must be removed. a solution for these two veneto banks must be outlined very shortly, protecting savers and guaranteeing the continuity of the business relationships maintained by the many small and medium - sized enterprises based in an economically important area of the country. the italian authorities are totally committed to resolving this problem. non - performing loans the problem of non - performing loans is easing as the economy recovers. the flow of new npls in relation to total loans now stands at 2. 7 per cent, which is lower than before the crisis. the stock, net of loan loss provisions, is also diminishing, from 10. 9 to 9. 4 per cent of total loans in 2016. the disposals already scheduled by the main italian banking groups will speed up the rate of decrease. the bank of italy has voiced its opinion on the matter of npls on several occasions. i will therefore simply mention again the key issues and refer you to other documents for a more detailed analysis. 3 one of the first issues relates to the strategies adopted by banks to manage npls. farreaching changes are necessary here. the guidelines published by the ssm are an important point of reference ; the bank of italy is extending them, with the necessary adjustments, to the banks under its direct supervision. there are a large number of options from which the banks can choose and they should take advantage of them. the italian banking system is now more aware of the various incentives, as is clear from the initiatives already under way, but a stronger and broader commitment is needed. banks need to get the most out of the instruments available for out - of - court settlement with firms regarding debt restructuring and the transfer of real estate collateral. the measures will only be effective to the extent that the