##ures in place, the deficit would be around 3 per cent of gdp in both years. for budgetary policy to support economic activity effectively, it must preserve confidence in the improvement of the public accounts and the reduction of the ratio of debt to gdp. the volume of public sector securities to be placed annually on the market is still massive : almost €340 billion just for the rollover of securities maturing in 2019, on top of the roughly €50 billion expected to be needed to finance the deficit. financial market conditions remain tense. since last spring ’ s peak, share prices have come down by 12 per cent in the euro area and by 17 per cent in italy. in the same period, private bond yields have risen by 40 and 100 basis points respectively ( to 1. 6 and 2. 5 per cent ). italy ’ s divergence from the euro - area average has been most evident in the banking sector, where stock market indices have fallen by almost 40 per cent on average compared with 30 per cent in the euro area and bond yields have almost doubled, reaching 2. 4 per cent, against an average increase of 0. 3 percentage points in the euro area as a whole. the higher borrowing costs borne by italy ’ s banks have up to now been transmitted to interest rates on loans to a lesser extent than in the past, thanks to the stronger balance sheets of credit institutions and the rebalancing of their liabilities towards financial instruments that are less vulnerable to changes in market interest rates. signs of a moderate tightening in credit access conditions are nevertheless beginning to emerge from business surveys. last week the ecb ’ s governing council expressed concern about the increased downside risks surrounding the euro - area growth outlook, which could affect inflation developments over the medium term. the reduction in consumer price inflation, to 1. 4 per cent in january, primarily reflects the slowdown of the energy component but at 1. 1 per cent core inflation is still struggling to recover. the transmission of the increase in wages to prices has been slowed by the weakness of economic activity in recent months, which has translated into lower profit margins for firms. the council will continue to pursue the price stability objective – commonly defined as a rate of inflation below, but close to, 2 per cent in the medium term – with tenacity and patience. significant monetary stimulus will be guaranteed by low key interest rates, the large volumes of securities in central banks ’ portfolios and the reinvestment of principal payments from maturing

, the value of the securities in banks ’ portfolios stood at about €330 billion, just under 10 per cent of total assets ; it remains below the peak of €400 billion registered at the beginning of 2015. the purchases, which were concentrated in may and june, occurred in parallel with the rise in yields, at a time of weak credit demand. banks ’ investments help to stabilize government bond prices in periods of heightened tension and can enable subsequent capital gains if prices recover ; however, they expose intermediaries to the risks associated with further drops in prices. the share of securities classified in the portfolio valued at amortized cost, whose temporary changes in value do not affect capital, rose from 18 to 49 per cent on average between the end of 2017 and november 2018 ; it reached 61 per cent for the less significant banks. this increase helps attenuate the impact of fluctuations in the value of government bonds. the decrease from 4. 2 to 3. 6 years in the residual maturity of the securities classified in fair - valued portfolios goes in the same direction. the expansion in economic activity and orderly conditions on the sovereign debt market facilitates, together with renewed investor confidence, a gradual decline in the stock of government securities held in banks ’ balance sheets, as shown by the significant reduction in exposures between the beginning of 2015 and the end of 2017. the global financial crisis, the sovereign debt crisis and the attendant double - dip recession led to a significant restructuring of italian banks ’ liabilities. there has been a sharp reduction in market funding ; risk premiums have increased owing to factors specific to the banking sector and to the changes in the conditions of the public finances. since 2011, the decrease in interbank funding has been accompanied by a considerable increase in recourse to central bank refinancing. over the last few years, in the four targeted longer - term refinancing operations carried out between june 2016 and march 2017, the eurosystem allocated about €240 billion to italian banks of the €740 billion destined for euro - area banks. these operations have helped to sustain the disbursement of loans to households and firms and to lower the cost. from 2011 to today, net bond issuance on the international markets, mostly by large banks, has been negative overall, at - €47 billion ; the share of bonds in total funding has gone down from 11. 5 to 9. 5 per cent. the recent resurfacing of tensions in the government