measures – particularly regarding housing loans – must not turn into permanent exceptions ; capital requirements must be applied at the consolidated group level, with no new internal barriers to the banking union. and all jurisdictions – including by the way the united kingdom, where regulators rightly argue against the temptation of a race to the bottom – must effectively implement these accords by 1 january 2025 – just over two years from now. b. financial stability financial regulation is not an end in itself ; it is “ only ” a means to achieve the overarching goal of financial stability. the regulation put in place over the past 15 years has proven quite effective so far : we have successfully overcome the “ stress test ” of the covid crisis ; it is no coincidence that it has not escalated into a financial crisis. capital requirements have considerably bolstered the resilience of the banking sector : the cet1 ratio of the six main french banking group increased continuously from 5. 8 % in 2008 to 15. 7 % in 2021 [ with the first slight decrease in june 2022 at 14. 8 % ]. this time, banks have shifted from being part of the problem to part of the solution : they provided the vital liquidity shield needed by businesses during the acute phase of the crisis. page 4 sur 11 unfortunately, financial stability is not a steady - state that can be reached once and for all. it is a permanent task that requires constant awareness. and today, we are indeed facing growing concerns. we have entered a new phase of extremely rapid asset repricing and high volatility on financial markets, reflecting the uncertainty surrounding the macroeconomic and geopolitical environment. the russian war in ukraine casts a shadow over the economic outlook, while aggravating tensions on energy and commodity markets. page 5 sur 11 the resurgence of inflation and the rising fears that it will become more entrenched, is motivating central banks around the world to normalise and possibly tighten monetary policy. as a result, financial conditions have tightened, and could tighten further. against this background, the bottom line is : yes, we are facing rising threats to financial stability. but being gloomy and excessively alarmist across the boardi may prove to be inaccurate and even counterproductive, and result in selffulfilling financial distress. our prime role as guardian of financial stability is to remain objective, vigilant, and to differentiate the various situations. these short - term developments exacerbate more structural and

financial system conference – dublin, 2 november 2022 financial regulation : a french perspective speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ), deborah guedj ( deborah. guedj @ banquefrance. fr ) page 1 sur 11 ladies and gentlemen, i am delighted to be here in dublin, and i would like to thank warmly governor gabriel makhlouf for the invitation to speak today at this financial system conference. i have already had the pleasure of coming here four years ago, to talk about financial globalisation and more specifically about current account imbalances and the resulting financial vulnerabilities. these topics have faded into the background for some time as a result of the unprecedented succession of shocks and crises. but financial stability is obviously returning to the front stage in these turbulent times, putting to the test the reforms undertaken over the last decade, but also pointing to new pockets of financial stress. against this backdrop, i will reflect on the possible end of a favourable decade for financial regulation and financial stability ( i ). i will then focus on the real estate sector – so sensitive here in ireland – as a practical study case of the progress enabled by our regulatory and macroprudential toolkit ( ii ). i. the end of a favourable decade for financial regulation and financial stability? a. financial regulation it has now been fifteen years since the onset of the great financial crisis – no need to recall the social, economic and financial damage incurred. but lessons were learned. a favourable era for financial regulation followed. this momentum was spurred by revived international cooperation at the highest level, with the milestone g20 summits in 2009 and 2010 – the political laboratory of the following financial reforms. they resulted in several achievements to strengthen the existing regulatory framework for financial institutions, but also in bringing unregulated segments, activities and actors under supervisory watch – such as over the counter markets, rating agencies and hedge funds. significant progress has been made on these fronts ; even though there still remains room for improvement, notably for a better regulation of non - banking financial intermediation ( nbfi ) – i will come back to this issue. page 2 sur 11 in the banking sector, improvements in the regulatory framework are more than evident. the basel iii agreements finalised in 2017 require larger and sounder buffers for the banking sector and strengthen market discipline.