Like foreign languages, we may learn to live, perhaps even love, them. Attempts to compel a common language might risk creating the accountancy equivalent of Esperanto. Unfortunately, the analogy is inexact. Banks are, by their nature, international. So too are investors in, and regulators of, banks. If all parties speak different languages at the same time, the result is likely to be noise rather than signal. For banks, the noise to signal ratio has been particularly high during this crisis. Differences in accounting standards have contributed to this noise. In 2008, UK banks’ assets would have been £ trillion, or around 30%, larger under European IFRS than under US GAAP standards. These differences make problematic international comparisons of such rudimentary concepts as bank leverage. This in turn hinders investors’ risk assessments and regulators’ supervisory assessments.   A failure of efficient markets is not of itself a failure of fair value  It is commonly heard that the failure of EMH argues against fair value in favour of some alternative, such as amortised cost. The truth is more subtle than that. Deviation from EMH will cause both accounting measures to deliver distorted signals of value. Depending on the precise circumstances, either measure might deliver a more accurate measure of true economic value. To see this, consider four scenarios. Consider first a bank making a single loan. In the first period, amortised cost and fair valuations of this loan will be equal. Expected cashflows will in both cases be discounted at the prevailing market discount rate.

And we won’t give in to fiscal dominance: nobody should expect us to delay a warranted monetary normalisation in order to accommodate the debt problems of any Member state. 2. Our structural acceleration: France is catching up  [Slide 8] Monetary policy plays its full role but cannot be the only game in town, as it may have only a limited impact on national economic adjustments within the euro area. Since the financial crisis, several European countries, including Spain, have successfully launched major reforms and reached higher and sustainable growth while preserving their social model. [Slide 9] However, efforts should be pursued to spur economic growth in the medium term. Structural unemployment remains high and potential growth remains significantly below its 1990s or 2000s average. Structural reforms are needed to unleash the full economic potential of European countries. The case of France, today, is particularly interesting in that regard. France faces important structural challenges but as already said, the economic environment for reform has never been more favourable since the financial crisis. So it is our imperative to “fix the roof”, now. And the good news is that reforms are on a firm upward path. I stress it as a fully independent Central Banker: the new government has indeed displayed a strong commitment to reforms and already implemented major structural reforms to boost employment, productivity and resilience. [Slide 10] The recent labour market reforms have widened the negotiation space given to social partners for decision-making and reduced the uncertainties of labour disputes.