50 % in the past two years. for many, this contradiction serves to confirm the idea that finance exists within a world of its own and is disconnected from the “ real ” economy. 3 / – third paradox : we have made the banks “ secure ”, but financial risks are appearing in other areas. as i have already said, we now have robust banks and, in europe, the soon - to - be completed asset quality review, conducted under the aegis of the ecb, will help to guarantee this. however, this does not mean weaknesses have disappeared. they are still there, only in other parts of the system. at the moment, for example, credit activities are mainly concentrated in the hands of large asset managers who together manage portfolios of several tens of trillions of dollars. these managers are becoming increasingly sophisticated, and therefore more efficient, but at the same time they are getting bigger and bigger. they are judged on their short - term performances, often leading them to follow identical strategies, which in turn results in massive movements in the market. some – though not all – transform short - term savings into structured products, a practice which, as the crisis has shown, can prove very dangerous. 4 / – fourth paradox : our monetary policies are extremely accommodative, but inflation remains low and, in some cases, is even declining. throughout the developed world, central bis central bankers ’ speeches banks have slashed their policy rates close to the zero lower bound. their balance sheets have ballooned under the impact of asset purchases and liquidity injections. but in all these countries, inflation rates are at levels considered too low with respect to the price stability target – in some cases dangerously so. in the euro area, inflation has been falling steadily for six months. while it would be exaggerated to talk at the moment about deflation, the fact that monetary easing has had such a limited impact on prices is somewhat surprising. 5 / – the fifth and final paradox : long - term interest rates have never been so low. in real terms, they are close to or below zero. but in all countries, rates of investment as a proportion of gdp are still between 2 and 4 points below pre - crisis levels. it is only right that these paradoxes should have caught the attention of analysts and prompted concern among policy - makers. and it is understandable that questions have been raised over the efficiency of our financial system and the usefulness of certain financial activities. however, in complex

made over the last few years. it would be a shame to undermine that now. 4 - fourth, we need to recreate what keynes called “ opportunities to invest ”. too often, markets are constrained by obstacles, regulations and bans which act as a disincentive for investment. if we are going to apply a keynesian economic model, then we need to apply it to the full, and avoid distorting his thinking. structural reform doesn ’ t have to be painful ; on the contrary, it often creates a brighter future, and opens up opportunities to those who have none. 5 - fifth, we need to incorporate the structural changes in the financial sector into our prudential oversight. we need to adapt to a new environment where asset managers play the dominant role in capital allocation and asset price formation. this means changing the way we think, as well as our methods of analysis and action. in this context, the french model of integrated supervision is particularly apt. 6 - lastly, number six, we need to refocus financial innovation on the long - term. today, literally billions of dollars are spent finding ways to shave a few nanoseconds off arbitrage transactions between two trading platforms. at the same time, investors struggle to find secure long - term financing tools for public infrastructure, even though experience has shown that the private ( and social ) returns of this type of investment are much higher. “ infrastructure bonds ” have been shown to offer return / risk ratios that are often higher than those on traditional assets. the g20 has rightly made this issue a priority and is looking for ways to strike a better balance between incentives and initiatives, through regulation and financial engineering. bis central bankers ’ speeches