to improve. in the second quarter of this year the flow of new non - performing loans fell to 2 per cent of total lending, a level consistent with the average observed in the years prior to the global financial crisis. the stock of non - performing loans is also decreasing rapidly : net of write - downs, in june it had fallen to €150 billion, equal to 8. 4 per cent of total loans, from the peak of €200 billion, or around 11 per cent of total loans, reached in 2015. the ratio of bad debts to total loans has declined from 4. 8 to 3. 9 per cent. over the next few months, disposals and securitizations already under way and those recently announced by a number of banks will further drive down the stock of npls, which, net of existing write - downs, should fall below 8 per cent of total loans in the early months of 2018. banks ’ balance sheets need to be further bolstered to make them better able to withstand, now and going forward, the risks still weighing on the economic outlook. banks are responding to this also by referring to the ecb ’ s ‘ guidance to banks on non - performing loans ’ issued in march 2017. the measures to reduce the burden of non - performing assets announced last july during the european council are a step in the right direction. this is also the aim of the introduction, which should be gradual and properly calibrated, of a calendar approach to write - downs for future non - performing loans. the reforms passed in italy in recent years have shortened the duration of credit recovery proceedings ; there is room for further action. the recent passage of the enabling law laying the ground for a comprehensive reform of legislation on corporate crises and insolvency proceedings will provide a major contribution to this. the principles and criteria set out in the enabling law must be implemented and translated into rules that can truly speed up credit recovery times, preserving as much as possible the value of companies that are still in sound condition. banks must make full use of the tools that have recently become available in the domain of out - of - court settlements with firms for the restructuring of debts and the transfer of assets. moreover, having suitable and timely data on npls is indispensable for more effective internal management and to facilitate their sale on the market at adequate values. despite the improvement observed following the survey we launched last year, banks still need to make progress in this area too. the

the economic and monetary union : time to break the deadlock keynote address by ignazio visco governor of the bank of italy omfif - banca d ’ italia seminar “ the future of the euro area ” rome, 15 november 2019 this seminar comes at a difficult juncture for europe. the tide of the global financial crisis and the sovereign debt crisis has long fallen, but its poisonous legacy and geopolitical tensions are fuelling distrust, fears and even prejudices once thought long buried. the european construction is at a standstill while progress is badly needed in the key areas, where the union is better at prohibiting things than at getting them done. although the single currency was a vital step on the path to european integration, the economic and monetary union remains an unfinished construction. europe ’ s architects knew this, and wanted and anticipated greater progress in the future. even before the introduction of the euro, the unusual status of a stateless currency had been underlined, as had the institutional solitude of the european central bank ( ecb ) and the problems posed by the imperfect mobility of capital and labour. the risks inherent in this situation materialised with unanticipated violence during the sovereign debt crisis. the inadequacy of the euro area ’ s economic governance was laid bare. hesitancy in defining the procedures to support countries in difficulty fuelled fears of a break - up of the euro. spreads on government bond yields widened dramatically, in some cases by far beyond what would have been justified by the economic and financial conditions of the countries affected, making these conditions all the more difficult to overcome. the proposals for reform drawn up after the peak of the crisis envisaged the gradual strengthening of integration, first in the financial area and then for public finances. yet, seven years later, only partial progress has been made. the banking union is incomplete and not without flaws, the foundations for the capital union are still being laid, and fiscal union has been postponed to an unspecified future date. concerns about the public and private financial vulnerabilities accumulated during the crisis and mutual distrust keep progress on hold. while risk reduction and sharing should go hand in hand and mutually reinforce one another, uncertainty around how to proceed, disagreement on the sequence and effects of interventions, and fears of negative spillovers produce a standstill in the reform process. as a consequence, the euro area ’ s economic integration is being held back and the area itself continues to be exposed to financial risks. this dead