The Financial Stability Board published its Peer Review of Italy that positively evaluates Italy’s progress to date in reducing NPLs in the banking sector, a competence of the Directorate Regulation and Supervision of the Financial System of the Department of the Treasury.

The document highlights the Italian success achieved in this area, and the factors that have contributed to it: more favourable economic conditions have slowed the flow of new NPLs; close cooperation between domestic authorities; implementation of EBA and ECB guidelines and capital directives; increased supervisory intensity; the deliberate development of the secondary market for NPLs and reforms to the enforcement, restructuring and insolvency frameworks.

In addition to reducing NPLs in the banking system, these efforts have also increased technical capacity of the Italian financial sector.

Some other jurisdictions have introduced reforms modelled on the italian approach.