- testing at least on an annual basis. as regard implementation, regulators and monetary policy makers must increase coordination so that macroeconomic and financial stability assessment can be done in an integrated fashion, so as to arrive at a more relevant and convincing macro stress - testing scenario. finally, the third challenge or decision is the use of prudential measures. while it is unclear how effective domestic monetary policy can be in checking excessive asset price volatility, the threat of financial instability has given rise to a more prominent role for macro - prudential measures to reduce the procyclicality of the credit market. as we see it, the primary challenge in this respect is how best to move forward. combining the use of prudential measures with monetary policy is a useful policy option, but it is still an unsettling issue because of the concern for efficiency. in practice, discretionary prudential measures pose difficulty in the form of potential regulatory forbearance, market distortion, timing effectiveness, and the difficulty in modeling early warning system. rule - based prudential measures, on the other hand, pose difficulty in policy calibration. that is to say, calibrating this type of policy tools has so far proven difficult for emerging markets where data availability is limited and large structural breaks are usually present. let us now turn to the longer - term challenge in the pursuance of monetary and financial stability in emerging markets, that is, the issue of structural reform and its implementation. from a longer - term perspective, the attainment of monetary and financial stability is determined predominantly by the embedded structural features of the economy. these matter not only with regard to how shocks are propagated through the system but they also influence the effectiveness that policy stabilization efforts can cushion the economy from such shocks. in what follows, i will discuss two key aspects of the structural features that are important for the pursuance of monetary and financial stability. these are the financial development and the policy institutions and framework. first, financial development. one important requirement to ensure that the risk management capacity of the economy evolves with the changing nature of risk is to enhance the risk management ability of economic agents. the key to this would be to strengthen the efficiency and the robustness of the financial system. to achieve this, the strategy to enhance economic and financial resiliency must pay attention to the following considerations : the first is to recognize the benefit of having a well - balanced financial structure. efficient and well -

, accounting for 7. 1 per cent of total exports ; in contrast, the eu is the destination for 44 per cent of uk goods. according to our studies, if the uk and the eu imposed reciprocal trade tariffs, the long - term economic cost to the british economy would be significant, particularly if productivity growth diminished at the same time ; the repercussions for the euro area would instead be small. brexit is expected to have an impact on the eu ’ s budget, to which the uk makes a positive contribution. from 2010 to 2015, even taking into account the rebate negotiated by margaret thatcher in 1984 and the rebate received by the uk for its partial participation in justice and home affairs policies, the country contributed over €13 billion a year on average while receiving less than €7 billion. moreover, the eu will no longer receive the customs duty collected in the uk ; instead it will collect the duty levied on british exports to the eu. the overall effect is still difficult to assess. discussions are still under way about the uk ’ s financial obligations to the eu when it leaves ( the brexit bill ). calculating the amount is a complex and controversial matter. one question is how the uk ’ s share of the eu total should be calculated ( it amounts to about 15 per cent of gross national income but 12 per cent in terms of contribution to the budget after rebates ) and what asset and liability items should be included. this will probably be one of the most delicate issues faced during the exit negotiations. italy – unfavourable economic developments in the uk would in any case not have any major repercussions for italy in the short term. the slowdown that the bank of england has forecast for 2018 - 20 would have a negligible impact. even if the uk experienced such a deep recession as to reduce imports by 10 per cent over a three - year period, we estimate that the effect on italy ’ s gdp would be at most 0. 25 percentage points. 3 italy ’ s trade and financial ties with the uk are not as close as those of other major euro - area countries ( table 2 ). in 2015 italian exports to the uk amounted to 1. 8 per cent of gdp, against 2. 7 for france, 3. 2 for spain and 3. 7 for germany. imports amounted to 1. 1 per cent of gdp, again less than for the other countries. italy mainly exports machinery and mechanical engineering products, agri