In his recent report delivered at the annual assembly of Bankitalia shareholders, Governor Fabio Panetta emphasized the high levels of uncertainty in the global economy, fueled by persistent geopolitical and trade tensions.

This situation has adversely affected international trade and has intensified the fragmentation of the global economy, contributing to a slowdown in productive activities.

Panetta outlined the intricate relationship between tariffs and interest rates, stating that monetary policy decisions must balance two critical factors.

On one hand, the weakness of the European economy and geopolitical tensions are restraining consumption and investment, thus contributing to lower inflation.

Conversely, an increase in uncertainty—particularly stemming from sometimes contradictory announcements regarding U.S. trade policies—imposes caution regarding the reduction of official interest rates.

In the report, Panetta highlighted the negative repercussions of high official interest rates over the past year on the financial results for the 2024 fiscal year.

The first five months of 2024 saw no change in these rates.

Beginning in June, the European Central Bank (ECB) initiated a gradual reduction, decreasing the deposit rate at the Eurosystem by 100 basis points to 3% by the end of the year.

Furthermore, to manage short-term market rate variability, the spread between main refinancing operations and Eurosystem deposits was narrowed from 50 to 15 basis points on September 18, 2024. Subsequently, the ECB continued to lower official rates by 50 basis points throughout 2025.

In the latter half of 2024, the ECB also reduced its reinvestments of maturing assets under the Pandemic Emergency Purchase Programme (PEPP) by €7.5 billion per month, leading to a complete cessation by year-end.

Additionally, considering the maturing assets held under the Asset Purchase Programme (APP), the total stock of assets held by the Eurosystem for monetary policy purposes decreased by approximately €400 billion compared to 2023. The total funds allocated by the Eurosystem to Eurozone banks through refinancing operations also saw a substantial reduction from €410 billion to €34 billion, primarily due to repayments from the third series of Targeted Longer-Term Refinancing Operations (TLTRO3).

As of the end of 2024, the overall Eurosystem exposure to monetary policy counterparties consisted solely of main refinancing operations with weekly maturities and longer-term operations with quarterly maturities.

This evolution in monetary operations resulted in a significant decrease in the euro area's liquidity surplus, defined as the excess deposits held by banks at the Eurosystem above reserve requirements.

By the end of 2024, this surplus stood at €2.827 trillion, a decrease of €519 billion compared to the previous year.

Despite an overall contraction of general risk funds amounting to €11.4 billion over the last two years, Panetta assessed that the risk coverage remains adequate in both the short and medium term.

He noted the market's current forecasts regarding interest rate developments suggest an expectation of return to gross profit from 2025 onwards.

The financial landscape has been marked by significant modifications: the balance sheet of Bankitalia reflected a reduction for the third consecutive year, decreasing by €149 billion in 2024. This contraction represents a cumulative decrease of 28% since 2021, dropping from €1.538 trillion to €1.104 trillion.

The decline in assets is primarily attributed to a decrease in refinancing operations, which fell from €150 billion to €23 billion, and a reduction in monetary policy-held assets from €657 billion to €591 billion, of which €544 billion constituted Italian government bonds.

For the 2024 fiscal year, Bankitalia reported a net profit of €844 million, proposing to recognize the same €200 million dividend to shareholders as in the previous year, with the remaining €644 million allocated to the State, marking an increase of €29 million compared to 2023. Additionally, shareholders will receive €140 million from the special stabilization fund, now zeroed out, bringing the total distribution to €340 million.

Over the past five years, the total amount distributed to shareholders has reached €1.633 billion, while the sum allocated to the State in profits totals €14.406 billion, supplemented by €3.361 billion paid in taxes.