bank of italy does not allow banks to make early redemptions of capital instruments without a plan for their replacement with resources of equivalent quality and quantity. the quality of the italian banks ’ capital is high by international standards. we are also aware that the rigour with which we evaluate the inclusion of financial instruments in regulatory capital has appeared, in the past, to put italian banks at a disadvantage with respect to the situation in other countries. we deliberately maintained this policy, even when the market seemed to tolerate particularly high levels of risk. these practices, these evaluation criteria, which have been put to the test in the last two years, have so far brought benefits to banks, the economy, and the public finances. liquidity the system ’ s liquidity is still guaranteed by the massive injections of funds from the central banks. the oversight policy we introduced in 2007 has helped italy ’ s banking system to weather the severe strains of the last part of 2008 without major shocks. we continue to ask the banks to ensure that foreseeable outflows are covered over a broad range of maturities. the tools of analysis and intervention are being continually improved. the ten leading italian banking groups were asked to conduct a liquidity stress test, the results of which have shown that the largest groups have a high resistance to stress. in international cooperation fora, work is under way to draw up common safeguards against liquidity risks. the bank of italy favours a system based on two instruments : on the one side, the requirement permanently to keep sufficient liquid reserves to ensure that, even in the presence of stress, outflows are covered for an adequate period of time ; on the other side, the maintenance of a minimum structural equilibrium between the duration of liabilities and that of assets. opinion is broadly converging on these positions. the one - year financing operation recently conducted by the eurosystem has achieved records both in the number of counterparties ( 1, 121 ) and in the amount allotted ( more than €442 billion ). the participation of italian banks amounted to less than 3 per cent of the total. stress testing bank assets for the quality of loans, and more generally of bank assets, thorough stress testing, performed in a coordinated manner under the guidance of the supervisory authorities, is likewise essential in order to verify the soundness of the single banks and of the system as a whole, to improve the transparency of their balance sheets, and to restore the credit circuit to normal operation. in the

it should not be wasted. secondly, focusing on the capital markets union, despite progress having been somewhat slow, there are certainly areas where advances have been made. later today, the programme of this conference offers an opportunity to hear directly from the european commission on the capital markets union. accordingly, my objective now is merely to point out a couple of areas where initiatives have been taken to reactivate specific markets. one of those areas is the securitisation market. another one is the covered bond market. 3 / 6 both securitisations and covered bonds have traditionally been important financing sources for banks and it is my opinion that they will regain importance in banks ’ funding strategies as the ecb ’ s targeted longer - term refinancing operations ( tltro ii ) progressively mature, opening up new opportunities for the markets. in the field of securitisations, despite the stigma that has surrounded this product since the recent financial crisis, the european authorities have considered that appropriately regulated and well - structured securitisations can contribute to diversify funding sources, to promote better risk management and, ultimately, to mobilise more funds for the real economy. for these reasons, two regulations were published on 28 december 2017 in the official journal of the european union amending the regulatory framework applicable to securitisations, in an attempt to harness their benefits, restricting the risks arising from their inappropriate use. one regulation establishes a general framework for all securitisations, and creates a specific framework for those that are to be known as sts ( simple, transparent and standardised ). the other regulation transposes the new basel iii framework, making amendments to the prudential regulation of credit institutions and investment firms, both for general and for simple, transparent and standardised securitisations, which will benefit from a better treatment. these regulatory changes may incentivise changes in banks ’ funding and risk management strategies, and may trigger a renewed interest in securitisations, providing an opportunity to reactivate this market. covered bonds are another instrument where progress is being made. in particular, on 12 march the european commission released a proposal that seeks to harmonise their regulation in europe. the proposal includes a directive that specifies the core elements of what may be termed “ european covered bonds ”. it also amends banking prudential regulations, strengthening the conditions under which banks investing in these products may benefit from lower regulatory capital requirements. once the commission ’ s proposal is approved,