More financial stability but debt remains risk says BoI

Italy's financial stability is
improving thanks to more stable markets, falling inflation, a
GDP that is expected to accelerate in 2024, healthy banks and
companies with still growing profitability, the Bank of Italy
said in its regular report Tuesday, which also highlighted the
consequent reduction in the Btp/Bund spread.

   
On the other hand, the BoI, in addition to geopolitical risks,
pointed out that the public debt/GDP ratio "at high values
nevertheless remains a risk factor" and recalled that higher
growth rates and "an improvement in the structural deficit" will
be required to comply with the EU stability pact.

   
Purchases of BTPs and government bonds by households and foreign
investors, chasing higher yields, are increasing, while the
share of banks and insurance companies and, as a result of
monetary policies, is falling, the central bank added.

   
As shown in Via Nazionale's financial stability report, the
share of government bonds held by Italian households has risen
to over 10% of the total.

   
This is an effect of Btp Valore issues and a shift from current
account deposits of liquidity towards more remunerative
investments - a growth that went in parallel with that of
foreign funds, said the BoI.

   

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