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2022 Report on trends and risks of the Italian financial system in a comparative perspective

Trends and risks of the Italian financial system



The Report examines the trends in financial markets in the first half of 2022 in light of the developments in the reference framework. The document is structured in five sections. Section 1 presents the macroeconomic environment, analysing the repercussions of the outbreak of the conflict in Ukraine and developments in European policies aimed at supporting growth and accelerating the green and digital transition. Sections 2 and 3 examine equity and bond market developments, respectively. Sections 4 and 5 analyse the economic and financial performance of non-financial corporations and banks.


In the first half of 2022, the global economic outlook has been revised downwards in the wake of multiple factors: Russia's invasion of Ukraine; the resurgence of the COVID-19 pandemic; and rising inflation. In the Eurozone, the gradual normalisation of monetary policy, already under way in other advanced economies, is ongoing as a result of the significant rise in inflation, which was fuelled by the rise in energy prices and by some supply rigidities in the latter part of 2021, and finally amplified by the war in Ukraine in 2022. Interest rates, kept at extremely low levels in recent years, are therefore expected to rise rapidly. In order to support growth and accelerate the green and digital transition, the implementation of programmes launched by the European Commission with the NGEU continues. These measures are coupled with initiatives aimed at mitigating the recessionary scenarios that are foreseen especially for countries characterised by high dependence on fossil energy sources and pre-existing vulnerabilities, e.g. related to high levels of public and private debt.
The financial markets of the economies most exposed to the deterioration of the macroeconomic scenario have experienced significant turbulences. Since the beginning of the year, the S&P500 and EuroStoxx50 stock indices have both lost around 20%, while showing a significant increase in volatility. As regards the Italian market, in the first half of 2022, the Ftse Mib fell by 22%, more than the drop observed in the other major Eurozone economies; the fall in stock prices was uneven across sectors, being more marked in the technology (-30%), banking (-21%).
Secondary markets for government bonds in the euro area also experienced growing tensions, with yields rising by more than 2% in Italy compared to the beginning of the year, and with a sharp increase in volatility, which at the end of June 2022 reached its highest level since 2014. A similar trend can be observed in the secondary market for corporate debt instruments, where yields on bonds issued by both banks and non-financial companies have experienced steady growth since the beginning of the year.
Looking ahead, the worsening of the global economic outlook will be uneven across regions and sectors, also depending on the impact of high inflation and rising interest rates. Non-financial corporations and banks, which in 2021 markedly improved their profitability and capital adequacy, could experience increased vulnerabilities in the medium term, in the wake of the negative impact of this new economic environment on the cost of debt and credit quality. With specific reference to Italy, further issues could emerge in relation to banks' exposures to countries involved in the Russian-Ukrainian conflict, the drop in foreign trade, and the difficulty of reducing energy dependence on Russia in the short term. A further worsening in the expectations about economic growth and the uncertainty surrounding geopolitical developments may trigger further tensions in equity and bond markets in the coming months of the year.

The Report was prepared by:
Nadia Linciano (coordinator) - CONSOB, Head of the Research Department (
Valeria Caivano - CONSOB, Research Department (
Daniela Costa - CONSOB, Research Department (
Francesco Fancello - CONSOB, Research Department (
Monica Gentile - CONSOB, Research Department (

Lucia Pierantoni contributed to the analysis relative to bond markets and Italian banks.

The opinions expressed in the Report are the authors' personal views and are in no way binding on Consob.  


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