peers. especially italy, which has larger accumulated debt, has undertaken bold budgetary cuts. both countries have speeded up their budgetary consolidation and are implementing balanced budget rules to their constitutions. * * turning now to banking, we can see that the markets and banks themselves are not happy with the condition of the banking system, as shares have declined and interbank markets are not working as well as one would hope and expect. in europe, the systemic liquidity of the sector is supported by the european central bank which continues to provide liquidity on a full allotment basis, against a broad range of collateral, both marketable and non - marketable. the ecb has committed itself to continuing this flexible method of liquidity provision as long as necessary. and the amount of collateral available in the market is large enough to allow even much greater creation of liquidity than at present, if demanded. i think that the main problem with the banking system is that a further recapitalization of banks is already long overdue. this is the case throughout the world. perhaps this task is especially urgent for the euro area, because uncertainty regarding the health of banks aggravates the negative effects of economic imbalances and divergence in the area. bis central bankers ’ speeches this should be the task primarily of the shareholders of the weaker banks, who should refrain from taking dividends or should inject more capital if needed. in some cases, government investment in bank equity may also be necessary. coming from finland, i can understand very well the political problems involved in cleaning up the banking system. in the 1990 ’ s, after the great finnish banking crisis, the finnish government had to support the asset management company that handled the banks ’ problem assets, in amounts that at one point reached about 10 per cent of gdp. most of this money was later recovered, but in the meantime taxpayers were furious. the public frustration with the costs of the banking crisis has not been forgotten in my country. despite the short - term discomfort it entails, the resolution of banking problems is necessary for us to move forward to a lasting recovery. on the one hand, the recapitalization of the weaker but viable banks is necessary to restore confidence. on the other hand, the wellmanaged closure of weakest banks is necessary, so that they do not distort the market for the viable banks. an important part of the decisions of july 21 by the euro area heads of state or government was

ignazio visco : press conference remarks by mr ignazio visco, governor of the bank of italy, at the second g20 finance ministers and bank governors meeting, 7 april 2021. * * * good afternoon, today we discussed sustainable finance and two specific topics relating to financial regulation. on sustainable finance, the discussion concerned the work plan of the sustainable finance study group, which we decided to reactivate at our february meeting and which is co - chaired by china and the united states. the group has made rapid progress in the last few weeks and, following the inputs of the presidency, has agreed to focus its work this year on three areas : the first is sustainability reporting ; the second is related to the metrics for classifying and verifying investment sustainability ; and the third concerns how to enhance the contribution of international financial institutions to the goals of the paris agreement. in addition, the group will develop a multi - year roadmap on sustainable finance to address the most pressing issues relating to sustainable development. this will help in prioritizing its activity, which will initially be focused on climate but will subsequently look at sustainability more broadly. ministers and governors concurred on the importance of this agenda and agreed that the study group should be upgraded to a fully fledged working group. as regards financial regulation, today we discussed two documents submitted by the fsb : a report on the covid - 19 support measures and the main issues concerning their future evolution, and the final evaluation report on the effects of too - big - to - fail reforms. the first report shows that in the current and still uncertain circumstances most of the covid - 19 support measures remain in place, and their withdrawal is generally not imminent. authorities tend to view the potential risks to financial stability arising from the early removal of support measures as significant, and as being greater than those associated with a late withdrawal. we, ministers and governors, shared the main message of the report, which is that the persisting uncertainty over the evolution of the pandemic and the uneven pace of the recovery across countries call for a state - contingent and data - driven approach when deciding whether to adjust or end the support measures. this should be done in a gradual and targeted way, in order to minimize long - term financial stability risks. we also agreed on the need to maintain an internationally coordinated approach in responding to the pandemic, with the support of the financial stability board ( fsb ), to ensure that the financial sector continues to