bis central bankers ’ speeches as with fiscal reforms, risk - sharing mechanisms should be established only if powers to control risk - taking have been delegated to the european level as well. hence, a de - risking of banks is necessary before further steps towards a further mutualisation of liability in the form of a common dgs can be taken. as regards policies that contribute to mitigate risks in the banking sector, regulatory reforms that limit banks ’ exposure to sovereign risk are crucial. therefore, reforms of the current regulatory treatment of sovereign risk should be a pre - condition for further risk - sharing mechanisms. because sovereign debt is not per se a risk - free asset, regulation should address both, credit risk and concentration risk of sovereign exposures of banks. otherwise, effects of sovereign distress would be mutualised under the common deposit insurance system via the direct effects on its national banks. in addition, there are many national and economic policy measures which, directly or indirectly, affect the risk profiles and thus the solvency of banks. for instance, differences in national insolvency laws have direct consequences for the valuation of banks ’ assets and the burden that creditors must bear in the event of insolvency. hence, reforms need to strike a balance between retaining national discretion over domestic policies while, at the same time, preventing national sovereignty from risk - shifting to the european level through ( changes in ) regulations affecting bank solvency. the preconditions for a common deposit insurance scheme will not be met before these issues have been resolved. the capital markets union : enhancing channels for private sector risk - sharing the focus of the banking union has been on markets for debt capital. the capital market union can complement the banking union by supporting the development and integration of european capital markets beyond the banking sector, and by creating additional channels for private sector risk sharing. developing and integrating markets for equity capital through the removal of impediments to efficient, non - distorted market outcomes can play an important role in this regard ( deutsche bundesbank 2015b ). integrated capital markets contribute to risk sharing among investors, which can generate welfare gains. in integrated markets, local risks are shared amongst investors from different regions. individual investors can safeguard themselves against local income risks by diversifying their equity and debt - financed investment across borders. as the nominal exchange rate cannot adjust in a currency union, cross - border risk sharing plays an important role in balancing asynchronous business cycles and thus in supporting the stability of the currency union

2021 paris europlace – studio gabriel, paris roads for the future : central bank digital currency ( cbdc ) and innovative payments closing address by francois villeroy de galhau, governor of the banque de france ladies and gentlemen, it is a pleasure to be with you today streamed live from studio gabriel. i would like to extend my warmest thanks to paris europlace for having maintained through the crisis this fruitful dialogue with all stakeholders. before turning to my main point today, i want to stress the resilience of our french financial institutions, which have played a decisive role in helping our economy weather the crisis. it was popular a year ago to predict a financial apocalypse, and certain europeans, prone to self - flagellation, are still doing so today, whereas the americans are more self - confident. the reality speaks for itself : french banks ’ cet1 was higher at the end of the first quarter of 2021 ( 15 % ) than it was before the crisis ; their profitability, however still insufficient, has improved sharply in this q1 ; in general, french banks are in no way underprovisioned. france and europe are not facing a “ tsunami of bankruptcies ”, and should, on the contrary, see a strong recovery : cumulative growth of more than 10 % over 2021 and 2022. so we need to remain vigilant, but let ’ s stop scaring ourselves. this roughly reassuring situation is in no way a call for complacency and status quo. the covid - 19 crisis is acting as an accelerator for the major structural challenges banks and insurers are facing. these challenges are also putting creative pressure on central banks and supervisors. and i will elaborate today on how to catalyse our efforts together on one “ road for the future ” towards innovative payments and cbdc. i. cbdc and innovative payments : next steps ahead once regarded as the " plumbing " behind the financial system, attitudes to a cbdc and to payments in general have dramatically changed over the past 18 months ; and these issues are now at the top of the central banking agenda. as is often the case with major innovations, reactions to the idea of a cbdc are very mixed. let me start by clarifying one major point : no decision has been taken at this stage on whether or not to create a digital euro. and before any such decision is made, rest assured that all necessary analysis will be properly conducted. it is with this