Although the external balance is no longer a constraint on growth, it nevertheless remains a significant and telling signal of the threats to its sustainability. What is the cause of the deficit? French domestic demand, boosted by higher household consumption than the European average, may have been one explanatory factor in the past, but the main explanation lies elsewhere. France’s declining export performance is frequently attributed to the inadequate degree of sectoral specialisation. This is of course insufficient to explain the movement recorded over the past three years. Specialisation tends to evolve slowly over time, whereas the decline in the trade balance has been sudden and dramatic; and had not been anticipated by any of the analysts who continuously study its structure and developments. BIS Review 92/2007  3  It is clear that the price-competitiveness of French industries has deteriorated significantly in recent years. Has the euro’s appreciation played a role in this? On the one hand, it undoubtedly penalises export sectors whose competitors are located in other monetary areas. But, on the other hand, it benefits those sectors which are large consumers of imported commodities. At this stage, the overall effect on France’s growth and external balance is not clearly apparent. Furthermore, two observations must be made: first, it is mainly intra-euro area trade that is worsening; second, many of France’s European partners faced with the same constraints are performing better.

The public debt and fiscal consolidation are still an area that requires additional vigilance by the policymakers in emerging economies, especially in light of changing financial conditions in the upcoming period. Around a decade after the global crisis, we have seen that the banks, globally, are in a quite better shape. However, the reforms and Basel requirements should be fully implemented in order to build resilient banks. The digitalization is yet another interesting phenomenon of today’s life and unavoidable element of the current global environment. Fintech in banking industry provides new revolutionary approach to the supply of banking services, as a response of the banks to the changing habits of their clients. This creates new opportunities, but also risks that regulatory authorities must be aware of. Therefore, globalization and innovation in financial sector call for deepening the international cooperation between authorities in different fields of operation. This conference is just one of the possible forms of this international cooperation. Today, we will discuss the empirical findings from the research papers received upon our Call for papers, on different and very important central banking issues, while tomorrow we will have panel discussions on policy issues with high-level representatives from central banks and international institutions. I believe that all together, we will make contribution by answering the pending economic questions that I mentioned earlier and exchanging experiences that will enable us to better cope with the future challenges. I wish you interesting conference, fruitful discussion and pleasant stay in Ohrid! Thank you. 2/2  BIS central bankers' speeches