more than one occasion, our treasury ’ s annual resort to the markets is on the order of €400 billion. in a context still fraught with tension, it takes very little to undermine investor confidence. this is what happened between the summer of 2011 and the spring of 2012, when the share of italian government bonds in foreign hands plummeted. the agreements concluded in the last two years have put the earlier budget commitments into practice. the rule on public debt, which will apply to italy for the first time in 2016, calls for an average annual reduction of about one twentieth of the excess over 60 per cent of gdp. in order to comply, it is not necessary to lower the nominal size of the debt. in “ normal ” conditions of close to 3 per cent nominal economic growth, all that is needed is structural budget balance. contrary to what some commentators say, a correction of €40 – 50 billion a year will not be required, nor will it be necessary to maintain a restrictive budget policy permanently. although the debt rule does allow some room for flexibility, we must continue to aim for real growth in the economy, and hence the recovery of investment – which is at once a supply factor and a fundamental demand component. as to price developments, inflation is still below the level consistent with the ecb ’ s definition of price stability, i. e. an annual price rise of below but close to 2 per cent in the medium term. actually, consumer price inflation in the euro area and italy has fallen consistently more than expected in recent months and has kept below 1 per cent since october last year. according to recent estimates by the ecb, euro - area inflation will average 1. 0 per cent this year, 1. 3 per cent in 2015 and 1. 5 per cent in 2016. our forecasts paint a similar picture for consumer prices in italy. we are not in a situation of generalized price reduction, of deflation. but even a long period of excessively small price changes can have undesirable consequences : it hinders the correction of macroeconomic imbalances through the adjustment of relative prices ; it can prompt consumers to postpone purchases, especially of durable goods ; it can affect the cost of capital thus deterring capital formation ; and it makes debt service more onerous. if such a situation lasts too long, it can cause inflation expectations to become dangerously detached from the monetary policy. the risk of long - term inflation expectations no longer being anchored to price stability must be

investors in the restructuring of the greek public debt clearly revealed the implications of the ban on the financial rescue of a member state imposed by the maastricht treaty and of the lack of a protocol for handling sovereign crises. the tensions became systemic ; the countries that suffered the most were spain, above all owing to its banking system ’ s excessive exposure to the property market, and italy, which was vulnerable because of its high public debt and the loss of competitiveness and growth capability in connection with the country ’ s pronounced slowness to adjust to the major political, commercial, demographic and technological changes of the last twenty years. the yield spreads between the euro - area ’ s sovereign securities increased rapidly. for some countries, including italy, they rose far above the level justified by the economic fundamentals. the spread between ten - year btps and german bunds, still less than 200 basis points in the first half of 2011, reached 550 basis points at the end of that year. after narrowing in the early months of 2012, it returned above 500 basis points in july. we estimated then − and explained in technical analyses and public interventions − that less than half of this amount was due to the weaknesses of our economy ; the rest reflected the fears of the single currency breaking up. bis central bankers ’ speeches national policies and european reforms to achieve a given number of objectives, economic policy must have at least an equal number of independent instruments at its disposal. and in fact the european strategy in response to the crisis did identify two instruments with which to pursue two objectives : national policies to remove the fragilities present in individual economies and a strengthening of the union to dispel the fears for the integrity of the single currency. in this case, however, since the fears of euro reversibility and those for member countries ’ debt sustainability fueled each other, the instruments were not independent. the reform of european governance thus necessarily hinged on the tightening of the budget rules and the introduction of new procedures for the control of other macroeconomic imbalances. the considerable time needed to implement this strategy conflicted, however, with the persistent market uncertainties and the lack of an instrument, such as a common budget, that would make it possible to combat the recession that had followed the financial crisis, offsetting the adverse short - term effects of the necessary national budgetary adjustments with expansionary unitary policies. the succession of conventional and unconventional monetary policy measures helped to make market conditions easier and, as far as possible, to