The spread of the pandemic has significantly increased global risks. The authorities in the main economies have introduced expansionary policies to counter the recessionary effects of the health emergency and to safeguard financial stability.
In the euro area, the ECB Governing Council has adopted measures to preserve banks' liquidity and to encourage the flow of credit to the economy. The supervisory authorities have adopted measures to counter possible squeezes on bank credit.
In Italy, the risks to financial stability stemming from the sharp decline in economic activity are also being mitigated by the very substantial funds that the Government has ploughed into supporting household income and ensuring business continuity.
Households, firms and banks are facing the new risks from stronger financial positions than at the start of the global financial crisis. Even if they have declined, insurance companies' solvency positions nevertheless remain well above the regulatory minimum. The liquidity risks for Italian open-end investment funds are limited.
