in 1990 to more than 100 % in 1996. the use of derivatives increases the volume of transactions in financial assets that can be carried out with the existing money balances : the demand for and supply of securities increases by a multiple of the available liquidity. derivatives permit more efficient risk management ; but, used improperly, they entail the risk of instability for market participants. one fundamental reason for the increase in the market value of shares has been the growth in the actual and potential liquidity of national and international financial markets. the reduction in long - term interest rates, fostered by low inflation and a curbing of budget deficits, can also be traced to the same cause. – 5 – the abundant supply of liquidity in the markets is the consequence of the us balance - of - payments deficit and the monetary expansion in japan, which accelerated in mid - 1995 in the wake of the mexican crisis. following the asian crisis, large liquid balances were channelled into dollardenominated instruments and into the european markets. the italian economy the exports of the united states, japan and the united kingdom declined in the first half of 1998. those of the euro area countries continued to rise, although this was largely due to france and germany, which recorded annualised increases of respectively 3. 4 and 2. 8 % compared with the second half of 1997. in italy, the volume of exports contracted in late 1997 and the first few months of 1998, followed by a temporary recovery. the trend at the end of the year appears to have been downward again. imports did not decline until the second half of the year ; prices fell significantly. the surplus on the current account of the balance of payments was to 2. 2 % of gdp, as against 3. 2 % in 1997. the recovery in investment that had begun in spring 1997 faltered in 1998. investment in construction has continued its downward trend. the pick - up in household consumption has proceeded regularly but at a pace that remains modest. industrial production remained broadly unchanged for most of the year. preliminary estimates for january 1999 indicate that output will be at about the same level as in january 1998. firms ’ expectations of new orders deteriorated steadily for most of last year. households ’ confidence, though lower in the second half than in the first, remains relatively high. thanks to the introduction and extension of forms of flexibility in labour practices, employment has staged a recovery ; the number of part - time and fixed - term contracts has increased considerably. on the basis

incorrectly. there are nearly 5, 000 such complaints per year. the banking supervision department checks that the banks involved respond promptly and adequately. however, for the protection rules to be fully effective, it is necessary to create the conditions for an increase in bank customers ’ knowledge of the characteristics of the financial products in which they invest their savings, the yields they can expect, and the nature and size of the risks they run. several surveys have shown the existence of gaps to be filled. recently, authorities, trade associations – including abi – and consumer associations have taken initiatives in this field. as of last year the bank of italy has devoted a section of its website to financial education ; in addition, we have launched, in cooperation with the ministry of education, a training programme for school teachers, so that economic and financial education can be included in the syllabus. the governance of banks on the basis of the rules the bank of italy laid down in march, banks must submit a governance plan and approve the necessary bylaw amendments by june 2009. the bank of italy does not prefer one or another of the board models provided for by civil law ; it nonetheless takes a firm line in ensuring that, no matter which mode is chosen, the principles of sound and prudent management are complied with in the bylaws and in practice. to the same end, the rules that we have adopted require banks to introduce limits on the positions that their corporate officers can hold on other governing bodies ; they also prohibit members of control bodies from having operating responsibilities in other group companies or strategic affiliates. the presence of persons on more than one board of directors is to be considered natural within a group. responsibility for assessing any competition issues arising from the presence of directors on the boards of more than one company lies with the antitrust authority, with which we are ready to cooperate, so as to coordinate interventions in the matters for which we are respectively competent. the prevention of conflicts of interest is also achieved through limits and conditions for banks ’ assumption of related party risks. a set of rules has just been submitted to the interministerial committee for credit and savings. for its part, consob is drawing up rules, applicable to all listed companies and companies with shares widely distributed among the public, which assign a key role to the independent directors in transactions with related parties. together with consob, we shall ensure that the rules are coordinated and limit the compliance burden on intermediaries. overcoming the asset management crisis the