the shift to less liquid assets brings in greater scope for valuation uncertainty, which may also need to be factored into the fs. conclusion i have focussed today on risks inherent in the ma, in particular on risks from less liquid assets stemming from uncertainty about the credit rating, uncertainty around valuations, and uncertainty about the amount of ma benefit that should be taken as a credit to insurers ’ balance sheets. these are all risks that insurers ’ boards and senior management need to be across and to understand the vulnerabilities in assumptions that have to be made. the ma is a significant benefit for firms, in bringing forward unrealised profits that are then available to be deployed to grow businesses, or to reward shareholders. however, an addition to the risk - free rate is appropriate for annuities where they are well matched, and the ma is a valuable source of resilience for annuity writers. we will want to continue to have a very high level of confidence that there are no material risks to those returns being earned. close supervision of the ma contributes to securing an adequate degree of protection for policyholders and we will continue to develop our analysis both to improve our supervision and to inform policy development. the call for evidence has drawn a wide range of views on the nature of the ma and we are committed to working with industry and hmt to deliver meaningful and progressive reform to solvency ii, in line with hmt ’ s objectives for the review. annuity writers may rightly feel that they receive significant supervisory challenge from the pra. this will not change, given the nature and importance of the annuity product, the significant judgements and assumptions that underpin the ma benefit available to firms, and the impact of annuity providers on our policyholder protection objective. as you have heard before, from jane austen and david rule, annuities are a very serious business. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice appendix chart 1 : buy - in, buy - out and longevity swap volumes. source : lcp chart 2 : breakdown of the major uk annuity writers ’ scr ( ye19 ). source : qrts, pra analysis, ye19 all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice chart 3 : ma portfolios. source : q

ignazio visco : the exit from the euro crisis – opportunities and challenges of the banking union speech by mr ignazio visco, governor of the bank of italy, at the conference “ europe and the future of global governance ”, organized by the italian institute of international affairs and the us council on foreign relations, rome, 10 september 2013. * * * the euro area has suffered two recessions in the last five years. gdp contracted for five consecutive quarters starting in the spring of 2008 ; the fall came to more than 4 percent in 2009. the subsequent recovery was short - lived : the outbreak of the sovereign debt crisis in mid - 2011 was followed by six quarterly declines. in 2012, gdp was still 1. 3 percent less than in 2007. the signs now are that the contraction is drawing to a close. gdp resumed moderate growth in the second quarter of this year, reflecting the expansion of exports and progress in domestic demand, and the confidence indicators improved somewhat over the summer. actual and expected inflation remain subdued, well below 2 percent. however, the timing and strength of the recovery are still highly uncertain. the resolve with which european and national authorities continue to implement the reform strategy devised to deal with the crisis will be decisive for financial conditions and for business and consumer confidence. externally, the slowdown in the emerging economies and the recent geopolitical tensions in the middle east threaten to undermine the prospects for world demand. the crisis did not hit all the euro - area countries in the same way, and the recovery is correspondingly asymmetrical. in italy the recession has been longer and deeper than in most other countries. last year ’ s output was almost 7 percent less than in 2007. in the first half of 2013 gdp diminished again, but at a slower pace, with exports still providing the main stimulus. the latest indicators are consistent with gradual improvement : the decline in output should come to a halt in the coming months. the downside risks to this scenario are compounded by investors ’ concerns about possible political instability. the spark that ignited the sovereign debt crisis in the euro area at the end of 2009 was the unveiling of the dramatic state of the public finances in greece. but the tensions soon fed on the economic weaknesses of other member states – macroeconomic imbalances, real - estate bubbles, distressed financial systems, high public debt. the crisis became systemic in the summer of 2011 with the announcement of the involvement of private investors in restructuring the greek debt, which