from earlier in the year, we should not take much solace from that. after a very weak first half, when growth was less than one percent, economic activity has strengthened somewhat and inflation pressures are starting to ease. growth in the third quarter is currently estimated 2. 5 percent, and recent indicators suggest growth in the fourth quarter could be somewhat higher. however as we look toward 2012 the u. s. economy continues to face several obstacles to a robust economy. accordingly, i expect growth of about 2. 75 percent for 2012, not much higher. we also continue to face significant downside risks, mostly related to the stress in the eurozone. we cannot be satisfied with the current state of the economy or the outlook for the next few years. the economy is operating far below its productive potential – leaving the levels of output, income and employment much lower than they would be if the economy ’ s unused resources were put back to work. one summary statistic says it all – the unemployment rate is unacceptably high at 9 percent. imbalances and deleveraging so why has the u. s. recovery been so underwhelming? i think the answer lies in the nature of the boom in credit and housing, and the collateral damage that the bust caused to household balance sheets and to the financial system. recoveries that take place in the aftermath of severe financial shocks and big declines in asset prices that were mainly funded by debt require highly indebted borrowers to deleverage, or in other words, pay down their debts. these shocks and asset price declines, in turn, generate large losses for the financial sector that tightens credit availability and further restricts demand. with weak demand comes weak income growth. meanwhile, financial and economic volatility and the uncertainty this creates about prospects for future incomes causes those who retain access to credit to hold back. what we have learned, i think, is that the power of these economic forces is even stronger than we had previously understood. and, in such circumstances, although a stimulative monetary policy is essential for recovery, it may not be sufficient. to illustrate the problem, let ’ s begin by examining net debt flows in the private nonfinancial and government sectors over the last 10 years. as can be seen in chart 1, borrowing by the bis central bankers ’ speeches private nonfinancial sector rose rapidly from 2003 to 2006 and remained high until the crisis hit. then borrowing turned negative as new

adverse scenario of further severe health restrictions – which is not the case today – would not prevent the french economy from returning by next year to the gdp trajectory it would have followed in the absence of the covid crisis. these possible restrictions would admittedly reduce average growth in 2022, but this should be fully offset by additional growth in 2023. the other short - term issue is of course that of inflation : it is now close to its peak in our country ( december showing first signs of stabilisation ) and in the euro area. while remaining very vigilant, we believe that supply difficulties and energy pressures should gradually subside over the course of the year. we should then return not to the low inflation of the past, but to a new inflation regime close to our 2 % target, with monetary policy normalising in stages accordingly. i would like to finish with the structural projects, on which i hope we will be able to make progress this year : the efficient firefighters of the crisis must gradually hand over to the architects. this is what i would like to see for france, centred around our two major medium - term economic challenges : insufficient potential growth, associated with the lack of skills and workforce available to businesses ; and excessive public debt and current expenses. we must also strengthen our architecture in europe : this year we must finalise regulations for traditional players ( banks with basel iii, insurance with solvency ii ), but also regulate new activities : cryptoassets and decentralised finance. the banque de france and the acpr will actively contribute to this within the framework of the french presidency of the european union. this french presidency will have served the euro well in its 20th year if it also makes progress on two as yet unfinished imperatives, the banking union and the capital markets union. they are indeed a prerequisite for better channelling european savings towards the ecological and digital transformations, as i mentioned earlier. indeed, happy new year 2022 to europe, to our dear country and especially to each of you! 2 / 2 bis central bankers'speeches