Italy: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis and Stress Testing

International Monetary Fund

No 2026/242, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents a comprehensive assessment of systemic risks and the resilience of Italy’s banking sector under the Financial Sector Assessment Program. The analysis evaluates key vulnerabilities, sectoral exposures, and risks affecting corporates and households, alongside detailed assessments of banks’ solvency and liquidity through comprehensive stress testing. It also examines cross-sectoral and cross-border interconnectedness, large exposures, and common exposures that could generate contagion. Italy’s financial system remains broadly sound and resilient despite challenging macrofinancial and geopolitical conditions. However, persistent structural vulnerabilities continue to constrain medium- to long-term growth and financial stability. Liquidity assessments indicate that Italian banks maintain adequate and generally comfortable liquidity buffers, while stress tests demonstrate resilience to significant liquidity outflows. The analysis recommends that Banca d’Italia continue incorporating emerging risks and heightened macroeconomic volatility into stress-testing frameworks. Further development of system-wide stress testing, supported by granular data on common sovereign exposures, can strengthen macroprudential surveillance and enhance timely financial stability assessments.

Pages: 109
Date: 2026-09-03
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