' capacity to ensure their orderly implementation based on sound and prudent management criteria and an adequate level of protection for investors. finally, the supervisory review and evaluation process ( srep ) for the less significant institutions ( lsis ) that we supervise directly is nearing completion. through it, we will set the pillar 2 capital requirements with which each bank must comply this year. also owing to the exceptional uncertainty marking the short - term outlook, the requirements will be set at a higher level than in the past, almost completely closing the gap with significant banks that has existed so far. investment funds and the markets while it squeezed the profitability of italian investment funds, the significant adjustment in financial asset prices that took place in the asset management sector following the outbreak of the war and the rise in interest rates was absorbed in an orderly manner, without unleashing sizeable disinvestments. net inflows held stable, while they decreased in the rest of europe. consistent with the rise in interest rates, there were outflows from the bond fund segment, offset by an increase in investments in equity funds. the outlook for fund flows, and hence for the fees that banks charge in exchange for distributing investment products, is uncertain. on the one hand, investment funds'business might be buoyed by investors'appetite for higher returns to at least partly offset the impact of inflation. on the other hand, the ongoing risk of further, sudden adjustments in financial asset prices encourages investment in safer instruments which, given the changed market conditions, do nevertheless offer satisfactory returns. the outflows from bank deposits that i mentioned earlier have been therefore accompanied by sizeable investments in government securities on the part of households. higher rates and the cyclical slowdown also increase liquidity, market and credit risks for these intermediaries. however, italian open - end funds are generally in a position to cope with them. leverage is low, the duration of assets under management is short and 7 / 11 bis - central bankers'speeches the degree of liquidity ( defined as the ratio of current account holdings to equity ) is high by historical standards. the share of high - yield bonds, which are more vulnerable than higher - rated bonds, has also declined in recent months. in the asset management segment, corporate governance aspects ( such as strategic planning capacity and the adequacy of internal controls ) are particularly important for sound and prudent management. for this reason, we are placing special emphasis on these aspects in

shortcomings in risk management processes and fraudulent conduct, contributed to this contraction. the collapse of the crypto - asset market, while leading to significant losses for some investors, has not had systemic consequences due to its limited interconnections with traditional financial intermediaries, the payments system and the real economy. our 8 / 11 bis - central bankers'speeches surveys show that only a small share of households in italy, estimated at around 2 per cent, hold these instruments, with modest amounts on average. the exposure of italian intermediaries to these markets is also very limited. as i have already pointed out in the past, the risks associated with the very high volatility in the crypto - asset markets highlight the need for an appropriate set of rules and checks to prevent this sector from developing uncontrollably. specifically, a distinction should be made between highly risky instruments and services that divert resources from productive activities and collective well - being, such as crypto - assets with no intrinsic value, and those that can bring tangible benefits to the economy, such as reducing the costs of cross - border payments and making the financial system more efficient. the spread of the latter can be fostered by developing rules and controls similar to those already enforced in the traditional financial system ; the former, instead, must be strongly discouraged. the bank of italy is focusing on the need to identify areas in which new distributed ledger technologies ( dlts ) can contribute to the overall stability of the financial system and to customer protection. in our communication of june 2022, we reminded banks of the opportunities and risks associated with the use of these technologies and of cryptoassets, encouraging them to implement measures to mitigate these risks. last november, we published milano hub's second call for proposals on the application of dlts to banking, financial, insurance and payment services. this project aims to disseminate best practices among market participants in order to promote, above all else, the reliability of dlt governance, the robustness of settlement mechanisms and of internal risk management controls, and the technical and legal certainty and security of operations. the call was closed a few days ago : 81 participants, with several applications from other european countries and southeast asia, submitted 56 projects, which are currently being evaluated. we are also working on developing technological solutions and defining a comprehensive framework of standards at european and global level to facilitate the safe use of dlts and their applications. we have devised a'trigger'solution that