, it was a joke ). as with other industries, i believe that innovation and competitiveness should be encouraged in finance. since the first commodity derivatives markets were created in chicago, market innovation has more often than not proved useful to the real economy, notably enabling companies in the real sector to better manage their risks. however, given that excesses in finance have more potential than in any other sector to damage the broader economy, financial innovation needs to be closely controlled. • to conclude, a great deal has already been achieved since 2009 to tighten control of the financial industry, and ensure that it fulfils its vital role in serving the economy without destabilising it. but there is still a lot of work underway that needs to be completed. i ’ m thinking in particular of work in those sectors where regulators have less influence than over banks : shadow banking, hedge funds, tax havens or rather regulatory havens. i am sure that the discussions in this session will help to give us some ideas. bis central bankers ’ speeches

christian noyer : monetary policy – how to cope with the current financial crisis? speech with mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at the gic ( global interdependence center ) conference on “ the global financial crisis – lessons from japan ”, session 1 : monetary policy – how to cope with the current financial crisis?, tokyo, 1 december 2012. * * * five years into the crisis, central banking does not look the same. numerous and significant changes have occurred in the way in which central banks perform their duties and fulfil their missions. whether we are witnessing temporary departures from normality or irreversible transformations is hard to tell. according to one view, frequently expressed, the crisis has ushered in a new era for central banking where independence, in particular, cannot be taken for granted. i do not share that assessment. true, central banks all around the world have taken on exceptional responsibilities. but they have also faced exceptional circumstances. and they have done so in a fully independent capacity and in accordance with their mandates. i also believe that, without such actions, the crisis would have inflicted much greater damage upon advanced economies. on numerous occasions, determined interventions by central banks have stabilised financial markets as spirals and panics were developing. central banks have constantly dealt with dysfunctions in credit and capital markets, borne out of excessive risk aversion. these interventions have largely succeeded in avoiding deflation and a cumulative fall in gdp during the most acute phases of the crisis. it remains true, however, that, contrary to past episodes which followed deep recessions, the current recovery appears sluggish, uncertain and fragile. the global growth environment remains affected by significant uncertainties. today, i would like to reflect upon these developments and focus on the challenges facing central banks in the post - crisis environment. 1. let me start with a few stylised facts the first, and most visible, is the spectacular expansion in central banks ’ balance sheets. in all advanced economies, their size has been multiplied, over four years, by a factor of two to five. this is an unprecedented development. beyond advanced countries, central banks in emerging economies have also, to a lesser extent, expanded their balance sheets, mainly, but not only, as a result of foreign exchange interventions. a second, and related, feature is the diversification of central banks ’ interventions. prior to