part to a large volume of public guarantees on bank bonds, which will mature in the next few years, however. going forward, the supply must be maintained by increasing the share of eligible assets, among other things by adding new types. great care must be taken to ensure that loan granting procedures meet the requirements for eurosystem refinancing. in the coming weeks we will call on the banks for an examination of the steps to be taken. in several cases italian banks not only provide finance, they also participate directly in the capital of firms. this can lead to a more accurate assessment of a firm ’ s growth prospects and a better evaluation of its financial needs. however, a participating interest can sometimes distort lending decisions ; as the size of shareholdings and loans increases, there is the risk of collusion or of actions designed to delay the surfacing of difficulties. the banks ’ governing bodies must properly safeguard against these risks : to maintain loan quality and keep banking profitable, in the banks ’ own interest ; to protect the value of the savings entrusted to them, in the interest of their customers ; and above all to ensure the efficient allocation of savings and boost the competitiveness of the productive economy. in january the legislation on related - party transactions came into force. it aims to protect banks from potential conflicts of interest with closely connected parties ; it provides a necessary counterweight to the european rules easing the restrictions on the links between banks and industry. the limits on exposure to each related party are calculated in relation both to the amount of credit granted and to the size of the bank ’ s shareholding in the company. the decision - making process on these matters must be transparent and correct and the outcome suitably motivated. the banks must be scrupulous in applying the new rules. the bank of italy will evaluate the effectiveness of the measures they adopt ; when necessary, it will intervene, possibly by setting stricter limits and conditions for related - party transactions. the difficulties besetting the credit system highlight once again firms ’ overdependence on bank lending. by international standards italian firms are undercapitalized, make very limited use of the capital market, and tend to limit scrutiny by investors. the credit market tensions will persist in the months to come. bank loans cannot be the sole source of external finance, as they are at present for most firms. the financing of investment must also tap new resources as well. it is in the banks ’ interest to encourage this process by

such instrument is not accidental : it reflects the unwillingness of many european countries to consider the possibility that the taxpayers of country a may pay, even temporarily, for the crisis of a bank in country b. according to this view, banks, although now supervised and subject to resolution by european institutions, must ultimately remain a national matter. the single deposit guarantee scheme the second key pillar of the banking union ( the european deposit insurance scheme ) seems to be still a long way in the future. the last five presidents ’ report of june 2015 underlined the need to continue moving ahead in relation to the single deposit insurance, because without it the euro runs the risk of being unable to absorb generalised confidence shocks ; the report recalled that – in comparison to national systems – a common guarantee scheme is more likely to be neutral over time for public finances, because risks are more spread and contributions are levied on a wider range of intermediaries 4. the european commission recently made a proposal – submitted to ecofin last december – to change the srm regulation in order to create a european deposit insurance scheme ( edis ), fully funded by private resources provided by all banks in the euro area. the proposal was submitted for consideration to the council, which set up a special working group. the edis is intended to establish a mutual system of private deposit insurance based on the deposit insurance fund ( dif ), to which the already existing national funds would gradually transfer the resources collected by the participating banks. the scheme would guarantee the same protection in all the countries participating in the ssm ; it would increase confidence in the european banking system on a level playing field. the edis should be established in three stages. in the first one ( reinsurance, until 2019 ) the dif would cover up to 20 per cent of the financial requirement or the losses of national funds. in this stage the dif would provide assistance only after the national funds have used all the available resources ( both ex - ante contributions and ex - post ones, in case additional funding is needed ). in the second stage ( co - insurance, from 2020 to 2023 ) the share of the financial commitment and of the cost of the assistance borne by dif would gradually increase ( up to 80 per cent ) ; in this stage the intervention by the dif and by the national funds would occur in parallel. in the third and last stage ( full insurance, from 2024 ), the dif would provide all funding. thus, we