currently being achieved through the social responsibility pact. the “ macron act ”, which allows working on sundays, for example, is certainly a positive step. however we have not done enough on the labour market, and i hope that the other reforms will see the light. we need a more flexible minimum wage and more room for negotiated arrangements in firms and branches, like in germany. public finances will only be sustainable and credible if the reduction in the structural deficit continues, in particular through a downsizing of the public sector. structural reforms must gain momentum in order to support growth. interest rates will eventually rise and the governments that have not implemented the necessary reforms will find themselves in a difficult situation. your second term as governor is coming to the end. what were the highlights? c. n. naturally, the financial crisis. the most important event has been the creation of the banking union. it is the most significant step since towards a united europe and is exactly in the spirit of how the founding fathers of europe wanted the eu to evolve since the introduction of the euro. the role of the governor of the bdf like that of the president of the bundesbank will increasingly be that of an important player on the european field, and much less at the national level. in germany, we tend to believe that the role of national central banks is shrinking. c. n. at the banque de france, some of my colleagues thought that one day the ecb could replace us. i told them that it would not happen as we are in a federal system with a relatively small centre. within the governing council we take common decisions but most of the work is done by the national central banks. but from now on we will have to work differently, for example, instead of looking for the best payment system for france, we must look for the best payment system for the euro area as a whole. in this respect, our best partner has mostly been the bundesbank. but the relationship seems to have become more distant? bis central bankers ’ speeches c. n. no, certainly not. the bundesbank remains our number one partner. we may start with different approaches on some of the issues in the governing council but in the vast majority of cases we have the same responses. it is with the bundesbank that we have developed most of the projects for the euro area, with which we organise conferences, and with which we cooperate in the international field. this cooperation is beneficial for both of us

the style and substance of financial regulation. in terms of style, because the summit marked the beginning of a radical turnaround in the governance of the global financial system with the creation of the enlarged g20 – to which spain was invited – that would culminate in the transformation of the financial stability forum into the financial stability board ( fsb ), a “ club ” of which spain became a fully fledged member for the first time. i shall not elaborate here on this change in style, but let me stress its historical nature, since it entailed the recognition of a far different world from that when the bretton woods institutions were designed at the end of the second world war. but the change in substance has not been any less. the philosophy behind international regulation until then had been based on the idea that private financial institutions knew better than anybody what they had to do, and we could therefore count on self - regulation. meantime, in many countries, hands - off supervision was the prevailing philosophy : the less the public sector laid its hands on financial activity, the better. the crisis and the initiative of the g20 leaders have called this philosophy into question. an example of this is the radical change in direction of the work of the basel committee. although the so - called basel ii reform had some very positive aspects, such as the greater sensitivity to risk of regulatory requirements and the consequent stimulus for banks to set in place better risk management systems, the committee ’ s work was naturally infused by the self - regulation approach then prevailing. however, since late 2008, financial regulation has taken a radically different road. we need only review the documents published by the basel committee last december, at the request of the g20 and the fsb, to realise how sharp the change in direction has been, to the extent, indeed, that some have called this new regulation “ basel iii ” : more capital of higher quality, more stringent requirements on trading activity, an obsession with avoiding procyclicality, etc. and the same can be said of the work of the various agencies and institutions ( imf, eu, iosco, etc. ) that are contributing to shaping the new regulation of financial systems. the objective is clear : this can not happen again. taking advantage of the eminent audience here today, i shall mention some of the developments i consider most important, since this international regulatory earthquake will entail a substantial change in how financial system players from all countries can act. and although the