have been gradually reducing the average size and holding period of our active positions in foreign reserve management, while increasing the frequency of trades. furthermore, we reinvest large bond redemptions by distributing purchases over an entire trading session. such issues, though highly technical, do have significant implications for the conduct of investment activity at major central banks. most of the remainder of this speech will be devoted to a couple of topics relating to the ‘ long view ’ in central banks ’ investment : ( i ) sustainable finance and ( ii ) strategic asset allocation. the importance of the first issue was underlined during the long, lively discussion of this topic during the previous session. let me make one point clear from the outset. general policy matters are for governments rather than central banks ; in democracy, decisions about broad societal aims are best left to elected politicians. nevertheless, central banks have been increasingly indicating that they are taking environmental, social and governance ( esg ) risk factors more fully into account as investors, that is, in their and risk management strategies. 1 why? there are two reasons for doing so, both linked to the constraints i just mentioned. one is reputation : central banks ’ investment policies must be seen as beyond reproach. the second is that, as long - term investors, central banks need to take the long - term sustainability of their investments seriously into account. the discussion on sustainable finance often revolves around a perceived trade - off between ‘ doing good ’ ( to the earth, or society at large ) and ‘ doing well ’ ( for shareholders, or, in our case, the public as the ultimate ‘ owner ’ of the bank ). while shareholder value is certainly not our main concern, this debate applies to a certain extent to central banks too. the concept of sustainability, however, appears to provide a link between doing good and doing well in the long run. recent experience has indeed shown that, so far, esg - compatible investment has not underperformed compared with unconstrained investment strategies. ( of course, past performance is no guide to future performance, as they say ; we need to keep alert to fashionable bias, and choose carefully. ) the bank of italy values sustainability in its asset allocation. 2 last year, we announced a new investment strategy that integrates esg profiles into the management of our direct euro - area equity portfolios. these portfolios total around €9 billion and include shares in about 140 listed companies. two esg criteria have been added to the

new nairu. economists have been surprised by the fact that the nairu has been continuously revised downwards. the supply of labour has increased more than expected, so there were reservoirs of labour. it could be migration or longer working hours. it is clear that if you believe that the degree of slack is higher, then the process of convergence to below, but close to, 2 % over the medium term would be drawn out. we should not draw implications for policy immediately but it shows you the richness of the discussion at a stage where the economy is booming and we don ’ t see very strong wage increases and little pass through to prices. however, we still see improvements in the path of inflation, so the bottom line is not bad at all. it means that the economy may have unexploited potential capacity. if slack is bigger, wouldn ’ t it mean that the path would be shallower? 1 / 4 bis central bankers'speeches well, other things being equal, it would be shallower. another explanation for low wage growth is that there is some backward looking behaviour in the wage - setting mechanism and in inflation expectations. for the time being i take an open view. monetary policy also plays a role. our asset purchases programme has a minimum horizon of end september, or beyond, if necessary, and in any case until we see a sustained adjustment in inflation. it is true that when we communicate about what happens beyond september, we want to have confirmation of data. things are going in the right direction but there are a number of uncertainties. so the message is patience, persistence and prudence. when do you need to communicate what happens beyond september? it can ’ t be on the very last day, but i argue that it shouldn ’ t be too early, either. there are not too many governing council meetings between now and then. can you see a scenario that you use the june projections to set up the decision and then take the actual decision in july? the projection exercise is always important. there are four per year and there will be one in june. it ’ s true that projections in general are useful to guide and structure the discussion. but i would caution against concluding that there is a pattern. we should not put too much weight on the projections. you mentioned earlier that market expects the first rate hike between the first and second quarters of next year. how comfortable with those expectations? the expectation implicit in the forward curve currently fluctuates around april and