towards reversing the trends in terms of competitiveness. the country is now demonstrating that there is a clear understanding of the need to pay close attention to firms ’ production costs, which is illustrated by the government ’ s so - called competiveness pact. it is also illustrated through a number of structural reforms that have started to be introduced to increase the flexibility of the economy and make job creation more resilient. from that standpoint the first move which is very significant is the so - called national pact between business and unions which will be vetted by law. this is a complete reversal of the previous trend. so in a sense, yes, the modele francais is adapting. but i also think the model is retaining some features which are strong cultural characteristics. it relies on positive demographic trends, high educational standards and the quality of infrastructure. so it is not true to say that the french economic model has been characterised exclusively by the excessive inflexibility of its welfare system. i would add finally that france has started taking measures to correct the excessive costs in the welfare system while not by changing radically the way it is constructed. instead, we will probably move more towards what the scandinavian countries have been able to do by introducing pension reforms to contain the costs of the system for corporates and containing healthcare expenditures. the nordic countries have proved that you can have an efficient welfare system without damaging competitiveness. euroweek : but countries like portugal are seeing their exports surging, underpinned by lower unit labour costs, while france ’ s exports continue to fall. does it concern you that the imf has openly suggested that france is in danger if being overtaken by southern europe? noyer : my understanding of what is behind the imf ’ s comment is the idea that these countries are addressing their competitiveness problems in a very strong manner, knowing that their problems were much more severe than those we had in france. their relative productivity was lower and they also had relatively inflexible labour markets, which they are now reforming, notably in spain and italy. so the imf has simply observed that france can ’ t afford to stand still when germany began to reform some years ago, and given that the southern european countries are also moving to address the problems of cost competitiveness and rigidities. this is clearly why the bis central bankers ’ speeches economic reforms announced in france are so important. i ’ m delighted that the government has made this such a high priority. euroweek :

have become highly important commercial product and could prompt certain institutions to slash their profit margins in order to win customer loyalty. yet, such practices contribute to rapidly pushing up property prices. thus, having observed that liquidity can disappear very rapidly, that central bank intervention must remain exceptional and that excessive maturity transformation increases systemic risk, a preventive approach is called for. such an approach should take into account two aspects : – i will start by discussing basel iii liquidity regulation, while stressing the fundamental goal : reducing liquidity risk and limiting maturity transformation. – nevertheless, whatever changes are made to the regulatory framework, this necessary but one - size - fits - all approach will still be inadequate if it is not accompanied, or even preceded, by new policies to manage maturity transformation by banks. bis central bankers ’ speeches i. an overview of basel iii liquidity regulation 1. a fundamental goal : preventing excessive maturity transformation risks since banks are in the best position to reduce information asymmetries in credit markets, select and monitor loans and diversify their asset portfolios, they are at the heart of maturity transformation activities. in traditional financial intermediation, banks collect savings and provide liquidity to the whole economy through transactions on their balance sheets. to do this, they transform liquid short - term liabilities into medium - to long - term assets with poor liquidity. this activity generates well - known risks, in particular in terms of interest rates and liquidity. maturity transformation is therefore subject to prudential regulation to ensure that basic security rules are followed. at the seoul summit in november 2010, the g20 leaders endorsed the basel iii framework that overhauls the current prudential regulatory regime. in particular, this is the role of the two new liquidity ratios : – the one - month liquidity ratio or liquidity coverage ratio ( lcr ) has the two - fold objective of preventing short - term liquidity shocks and requiring institutions to selfinsure against liquidity shortages in order to limit refinancing exclusively via the central bank. institutions should in no way consider that they have a guarantee of permanent access to such refinancing. in this respect, the use of foreign currency funding is not always justified by the need to fund assets denominated in these currencies in the absence of a sufficiently broad customer base in the countries concerned. such strategies are also used for arbitrage purposes. they contribute to overall market liquidity but they must remain of a magnitude that allows institutions