francois villeroy de galhau : between " shadow " banking and an angelic vision of the market – towards a balanced development of non - bank finance speech by mr francois villeroy de galhau, governor of the bank of france, at the presentation of the 22nd financial stability review, paris, 25 april 2018. * * * ladies and gentlemen, i am very pleased to welcome you this morning to this presentation of the 2018 financial stability review ( rsf ), dedicated to non - ban k finance. intended as a forum for dialogue and exchange, the fsr offers leading personalities from diverse backgrounds the chanceto have an open debate. i am delighted to see many of this year ’ s contributors here among us this morning, and i would like to extend my warm thanks to all the speakers : klaas knot, president of the dutch central bank ; philip lane, governor of the central bank of ireland ; robert ophele, president of the autorite des marches financiers ; paul hamill, global headof ficc at citadel securities ; yves perrier, ceo of amundi ; and richard portes, professor of economics at the london business school. the topic we have chosen to address is far from anodyne : [ slide 2 ] according to the financial stability board ( fsb ), non - bank financing totalled usd 160 trillion in 2016 [ monitoring universe of non - bank financial intermediation, munfi ], up 50 % relative to 2008 and accounting for close to half of all financial assets held by financial institutions worldwide, compared with 40 % in 2008. and yet – or maybe precisely because of this – there is still much heated debate over its scope and over what exactly it should be called. in order to better understand it, we need to rid ourselves of two mindsets : first, one of irrational fear, as non - bank finance also enables the financing of growth and innovation ; and, in contrast, an over - idealised or “ angelic ” vision of the sector, as shadow banking does indeed carry risks and regulators have a role to play in mitigating them. 1. overcoming our irrational fears : the benefits of market - based financing to overcome our irrational fears of non - bank finance, the words we use to describe it matter. is it “ shadow banking ", with all the negative connotations this implies, or rather, as some regard it, “ market - based finance ” or “ non - bank

this enlargement, both in political as well as economic terms, are clear. however, this does not make it less of a challenge, also for the ecb and the national central banks. from mid april onwards, the national central banks of the acceding countries will participate - as an observer - in meeting of escb committees ( in extended composition ) and meetings of the general council. enlargement involves a number of technical efforts from the side of the ecb and the national central bank, in terms of adaptations to the infrastructure, but also creates a new dimension to economic convergence and monetary stability in the european union. i am, however, convinced that the eurosystem will also master this challenge, as it has done before, on occasions, which demanded even more breath - taking efforts. ladies and gentlemen, i should now like to conclude. again, my gratitude goes to his excellency carlo ciampi and governor antonio fazio. i am deeply convinced that this meeting of the governing council will contribute to the team - sprit of the eurosystem and hence will be one more step in the direction of a united europe.