Fifteen Years of Single Monetary Policy in the Euro Area: A Bird’s Eye View, Effects on Italian Banks During the Crisis, and Lessons to Draw

Abstract

In the first fifteen years of its life the ECB has delivered price stability through an accommodative monetary policy stance. It has played a crucial role during the sovereign crisis. At the start of 2012, the severe liquidity stress, fixed through the L TROs, has signalled that Italian banks have to address their funding gap problem. To do it without hurting credit flows, a resumption of domestic savings is needed. Thus, the real lesson for Italian banks (and for Italy) is that the ultimate way out of the crisis lies in a quantum leap in the capability of generating higher profits (and income).

<v.chiordzzo@dbi.it>; <p.morelli@dbi.it>, Italian Banking Association — Economic Research Department. We would like to thank Vincenzo D’Apice for valuable comments. The opinions expressed in the paper are those of the Authors and do not involve the responsibility of the Italian Banking Association.