of about half a percentage point in the twelve - month rate of growth. the slowdown is common to the other major european countries and has affected all parts of the country and all categories of borrowers. the growth rate was modest particularly for small enterprises and manufacturing industry ; construction recorded an especially large slowdown. the fall in production and the uncertain cyclical outlook have depressed the demand for funds for fixed investment and working capital. households ’ demand for loans reflected the fall in housing market activity and purchases of durable goods. in 2008 lending to the sector grew by 6 per cent, compared with increases of more than 10 per cent in the previous years. personal loans continue to expand at a lively pace. the outcome for credit was also influenced by the more cautious lending policies adopted by banks in response to the increase in the cost of fund - raising, the partial closure of international sources, the deterioration in customers ’ creditworthiness and the need to improve capital ratios to cope with the pressure exerted by the markets at a time of pronounced uncertainty. in 2008 resources obtained from foreign banks and money market funds fell by about 10 per cent. they had risen by 20 per cent in 2007 and 34 per cent in 2006, when they had contributed nearly half the growth in fund - raising. banks have responded to the smaller inflow from abroad by increasing the funds they raise from italian households, above all with bonds. in 2008 the average cost of total fund - raising rose by 40 basis points compared with the previous year ; since october it has started to fall following the reductions in official interest rates and the partial normalization of the interbank market. loan quality is being affected by the recession. since the third quarter of last year the flow of new bad debts has been increasing rapidly, and in the last quarter of 2008 the ratio to total outstanding loans was the highest since 1999 ( not counting the peak in the fourth quarter of 2003 due to the failure of parmalat ). the deterioration continued in january, when the total debt of newly insolvent customers was 70 per cent greater than in january 2008. the system has a major strength – private - sector debt is considerably lower in italy than in other countries. corporate financial debt amounts to 75 per cent of gdp, around 12 points lower than the european average. the leverage of italian firms is now seven points lower than at the turn of the 1990s, on the eve of the last recession, and the percentage of financial costs covered by internally generated funds is higher. for households,

conference “ the new frontiers of digital finance ” paolo angelini deputy governor of the bank of italy digital finance and markets infrastructures consob auditorium rome, 10 march 2023 let me thank president savona and consob for inviting me today to talk about technological innovation in payments, securities clearing and settlement systems, i. e. the market infrastructure that is the backbone of our financial system. “ traditional ” digital innovation has been doing a lot for financial markets infrastructure i would argue that this is probably the sector least affected, thus far, by the latest technological developments that inspire today ’ s seminar. the adoption of digital technologies for financial market infrastructures started with the dematerialization of securities in the sixties. trading on digital platforms began to replace trading floors ( the “ pits ” ) in the eighties. in the nineties, real time gross settlement systems ( rtgs ) led to a revolution in wholesale payments worldwide, bringing added security to market transactions at affordable costs, thanks to their ability to effect a huge increase in efficiency ( a rise in the velocity of circulation of central bank money ). the next step was to eliminate counterparty risk in securities transactions via the adoption of delivery versus payment ( dvp ). 1 the emergence of fast electronic communication networks allowed investors to use real - time data for algorithmic and high - frequency trading, 2 which in europe now account for about 70 per cent of all equity trades. nowadays, reflecting a widespread dematerialization process, almost all financial assets are in digital form and traded through electronic platforms ; all wholesale payments are initiated and settled online. for example, the european large value payment system, target2, settles average daily transactions worth about 2. 5 trillion euro, one sixth of settlement systems implementing dvp perform a simultaneous transfer of the cask leg and the security leg of transactions on the counterparties ’ respective accounts. algorithmic trading implements order and trade decisions electronically and autonomously ( without the input of a human operator ). high - frequency trading is a subset of algorithmic trading in which orders are submitted and trades executed at high speed, usually microseconds, and a very tight intraday inventory position is maintained. the euro area ’ s annual nominal gdp ; 3 it can work jointly with target2 - securities ( t2s ), allowing dvp of the cash and security legs of transactions. so i would argue that, as far as market infrastructure is concerned, the digital revolution has already silently happened.