questions are lurking. it may be that these are playing a role in bouts of market nervousness – and could do so again. with that in mind, let me talk about a few issues – some familiar, but one or two rather newer. liquidity one issue that both the regulatory community and many market participants have focused on for a while now is an apparent decline in market liquidity at a time when capital markets have become a more important source of funding for the economy. we can debate how much of that decline in liquidity is a result of regulation – and certainly some of it is – and how much simply owes to large players deciding to alter the way they run their businesses independently of regulatory changes. 1 there is at least some evidence that market liquidity is more costly than it used to be. whether that is a big a problem is not clear. it could matter, for example, through the cost of capital to the productive side of the economy, as investors price the illiquidity of the assets they buy. this would mean that borrowers pay a little more than otherwise as a result. but are creditworthy borrowers actually having material difficulties accessing finance on reasonable terms, beyond what is explainable by their own macroeconomic fundamentals? it also seems that liquidity is somewhat less reliable even under conditions that could be thought to be “ normal ”, even in some of the largest sovereign markets in the world. recent events have not obviously demonstrated any deterioration, nor any improvement, in that situation. we don ’ t know how liquidity will stand up under genuine stressed conditions. this is of increasing importance, particularly given the large growth of assets under management. regulators are rightly emphasising the need for sound liquidity management by the asset managers, while market participants rightly point to the practices and tools they have to address these questions. but the key question is : what liquidity promise do the investors – many of them retail – think they have been given? not what the fine - print says, but what are they actually assuming? if their assumptions are at variance with the genuine underlying liquidity in the relevant markets, there could still be trouble even with careful planning by it ’ s also important to recall that many markets never had that much real liquidity anyway. outside the united states, corporate bond markets weren ’ t really liquid at any time and some observers say that even in the united states – the biggest corporate market – genuine liquidity was always a bit doubtful. bis

in germany and france. national operators are also few and small in size. the low growth in the sector partly reflects the delay with which this activity began in italy. it is penalized by the limited development of the stock market and the small average size of firms, which make it difficult to list the the governor ’ s concluding remarks annual report 2023 banca d ’ italia companies financed or to sell them to other larger companies once the initial growth phase is completed. venture capital would benefit if institutional investors were more involved : if the share of assets invested by insurance and pension funds in national funds were equal to that in france, funding would double. growth can also be fostered by removing legislative barriers. as regards the rules governing smaller fund managers in particular, banca d ’ italia will work to make implementing the enabling law that reforms the consolidated law on finance an opportunity for considering a simplification of the relative obligations. the increase in financing must be matched by greater investment opportunities. in italy, research work has high productivity and quality ratios, but limited resources. 22 boosting research and having better links with production would make it possible to turn as yet untapped potential into business opportunities. better public action public action plays a key role in the functioning of the economy, and not only because of the resources it makes available. some of the reforms implemented in the last few years have had positive effects on productivity and growth. we must continue along that path : the results are only gradually emerging over time, but they are there. 23 the reforms to civil justice and the digitalization of its procedures have made proceedings shorter and halved the number of pending cases compared with 15 years ago. the measures that have simplified market access for some services have made the entry of new firms easier and raised productivity in the sectors concerned. the digitalization of public administration has also increased. 24 the nrrp commits italy to implementing reforms and provides sizeable resources for modernizing its production system and public administration : according to our calculations, they amount to €16 billion for digitalization, €19 billion for research and innovation, €33 billion for transport infrastructures and €17 billion for business investment. it is hard for general government to make the best use of these considerable sums in a limited time frame, but doing so is crucial to reviving the economy ’ s growth potential. the full implementation of the reforms and investment envisaged in the nrrp – in addition to raising gdp by more than 2 percentage points in the short