in the current economic climate, the trend in the household saving rate reflects opposing pressures. on the one hand, it is curbed, via an income effect, by low growth affected by the waning of the post - pandemic recovery in the services sector, the legacies of the energy shock, and the monetary tightening in the main advanced economies. moreover, the substantial resources set aside during the pandemic allow a larger share of current income to be used for consumption purposes, especially at a time when purchasing power is being affected by high inflation. on the other hand, households ’ propensity to save is now tending to rise again as a precautionary response to uncertainty and to the downside risks for growth. it is also stimulated by the gradual increase in real interest rates that, if there are no liquidity constraints, reinforces what economists call the substitution effect. macroeconomic risks are, however, increasingly affected by geopolitical tensions, exacerbated by the ongoing dramatic events in the middle east, together with the protracted and tragic conflict in ukraine. there are also concerns about the evolution and effects of the real estate crisis in china, the risk that inflation will remain high for longer than currently expected, and the greater frequency of extreme weather events, which could lead to further energy and food crises. we are clearly talking about uncertainty and about risks that, since they are ‘ external ’ to individual euro - area countries and to the european union in general, cannot be countered by domestic - scale measures, but instead require wide - ranging, shared and coordinated action. economic policies in the euro area and at national level aim as far as possible to mitigate their potential repercussions on demand and on production activity and to ensure that inflation returns to the target levels fairly quickly. a crucial contribution, though necessarily spread over time, to achieving higher, more balanced and longer - lasting growth rates, as well as to keeping inflation low, has to come from the timely implementation of thorough reforms and decisive structural measures, made even more pressing today by the challenges relating to climate change, the digital transition and demographic change. in the euro area, the economic situation is clearly not satisfactory. the available information suggests that economic growth in the summer months was practically zero. activity is slack in manufacturing and is weakening in services. the european commission ’ s surveys point to a deterioration in consumer confidence, with regard to the short - term outlook for both economic activity and their own financial situation. the

financial markets. at the launch of the monetary union there were fears that certain structural features would make the italian economy more vulnerable than others to variations in the official rates. monetary policy produces its effects on the economy above all by influencing the cost differential between firms ’ external and internal finance. its impact is therefore amplified by information asymmetry concerning the state of the borrower, or by the impossibility for firms of replacing bank loans with market instruments such as bond issues. a situation that is especially common in italy, where small firms depending on bank credit are prevalent and where private capital markets are still less highly developed than in other large industrial countries. the effect is heightened if the loan market consists mainly of short - term, variablerate loans. studies conducted by the eurosystem using a broad range of econometric techniques have nevertheless found that, albeit with modest differences, the economies of all the euro - area countries have so far responded in similar fashion to changes in interest rates. in recent years the exceptionally low level of risk premiums and of interest rates, the abundance of finance in the form of both loans and other financial instruments, and the large volume of firms ’ internally generated funds may have softened the effects of structural disparities, which could re - emerge in the presence of less favourable economic and financial conditions. at the same time, however, the structure of the italian economy is becoming more robust. the consolidation of the credit system has given birth to large banks capable of operating on a range of markets. the improved efficiency of intermediaries and the considerable lengthening of corporate debt maturities have removed earlier weaknesses. the extraordinary development of the euro bond market and the recent opening of the italian stock exchange to international alliances will also help a system that had lost the market for corporate bonds and where firms ’ recourse to the equity market is still limited. further progress on these fronts is essential if we are to fully exploit the advantages of participating in the monetary union. financial innovation and monetary policy the diffusion of financial innovations, the creation of new products and new intermediaries, and the changing structure of the financial markets alter the importance of the various channels of monetary policy transmission and affect the analysis of money and credit aggregates and their role in monetary management. the role of the banking system in transmitting monetary policy impulses has been diminishing in importance. if the recent changes in the structure of the financial markets prove to be permanent, banks will increasingly be agents that originate loan assets which they