keeping missions and humanitarian aid ( €0. 3 billion ). finally, €0. 2 billion is made available for short - term substitution of school personnel and around €0. 3 billion for changes to the domestic stability pact. additional provisions inserted when the decree was ratified have no final effect on net borrowing. the amendments that increase the deficit ( the easing of the constraints imposed by the domestic stability pact, the extension of the irap relief on labour costs to banks, financial companies and insurance companies, and the attenuation of the rules on sector studies ) are offset by new tax measures ( changes in the deductibility of expenses for company cars ) and by a reduction in current and capital spending. at the end of september, the forecasting and planning report further updated the projections for the public finances on a current legislation basis : revenue was revised upwards by more than €6 billion, while expenditure was reduced by nearly €3 billion. a decree law approved together with the forecasting and planning report allocated the improvement largely to finance a one - off measure for persons with low incomes who are unable to exploit all the income tax reliefs ( €1. 9 billion, accounted for in the official estimate as a reduction in revenue ) and a net increase in expenditure of €5. 4 billion. the technical note appended to decree law 159 of 1 october 2007 estimates that the measure entails an expenditure increase of €5. 9 billion – most of which for the advance payment of charges pertaining to 2008 – and expenditure savings of €0. 5 billion. the additional current expenditure amounts to €2. 1 billion, excluding the indirect effects on revenue, and the additional capital expenditure to €3. 8 billion. the decree ’ s effects in subsequent years will be negligible. measures to support the weakest households include the start of a public housing construction programme ( €0. 6 billion ), which will also be used for the modernization of existing dwellings. a further €0. 1 billion is allocated for the purchase of property to be leased for social housing. additional resources are granted for the 2006 - 07 public employment labour contracts ; adjusted for the indirect impact on revenue, the measure will cost around €0. 5 billion. some current transfers to the state railways ( €1. 0 billion ) and the national road agency ( €0. 2 billion ) are also brought forward. a further €1. 5 billion is allocated for other capital expenditure, mainly on the metropolitan transport systems of rome,

asset management, attenuates the pressure of competition, increases the risk of conflicts of interest, and ultimately limits the growth of the sector and the protection of investors. intermediaries, and especially banks, must make asset management companies independent and permit competition in the distribution of products, so as to reduce the costs borne by investors. as in other fields, market initiatives are to be preferred to legislative measures ; in their absence legislation or regulation will be inevitable. the competitiveness of italian funds also requires a review of their tax treatment. it is important that the current revision of the mechanism for taxing financial income take account of the need for a reasonable degree of uniformity across countries as regards how and when taxes are levied and their level. there is room for increased competition and efficiency in the field of payment services as well. technology now makes it possible to open the market to new participants, such as mobile phone operators and providers of other services. within the sphere of its regulatory responsibilities the bank of italy will introduce the measures needed to permit such developments, while simultaneously ensuring the security of transactions. at european level the creation of a single payments area will require legislative harmonization. the proposals under discussion envisage a new category of specialized european intermediaries that will be able to combine payment transactions with other commercial activities ; supervision will be based on the principle of proportionality and prudential requirements related to the risks. this is a development to be encouraged. the integration of markets and the growing role of transnational intermediaries require the harmonization at european level of the rules governing supervision and a strengthening of cooperation among national authorities. this year will see another review of the lamfalussy process, including its extension to banking and insurance. convergence of supervisory practices is essential for the efficiency of the european capital market. there are still important differences, such as those in the treatment of hybrid instruments in computing regulatory capital, that must be analyzed and removed. the bank of italy will liberalize and simplify the procedures for opening new branches, thereby increasing banks ’ independence in shaping their distribution strategies. what is required of the supervisory authority is not so much rigid regulation as the ability to intervene promptly to facilitate and orientate solutions found independently by the market. in applying the highest standards of risk management, the activity of the bank of italy and that of banks pursue largely similar objectives. prudential rules reinforce, do not replace, the practices of sound bank management. sometimes situations arise in which individual intermedia