christian noyer : bank of france – bank of japan : converging views opening speech by mr christian noyer, governor of the bank of france, at a joint symposium of the bank of france and the bank of japan, paris, 8 january 2008. * * * mr ambassador, governors, chairpersons, professors, ladies and gentlemen, dear friends, i am delighted to welcome you today to the banque de france together with the governor of the bank of japan, toshihiko fukui. yokosso ilashaimase! some of you have come as neighbours, and others have made the trip from tokyo to attend this symposium, for which i would like to thank you wholeheartedly. and, as 2008 has just begun, i would like to wish you a very happy new year : the year of the rat in the japanese calendar, “ akemashite omedeto gozaimasu nesumi doshi ”. i recently read the following prediction concerning this year : “ it will be particularly favourable for all forms of investments and savings ( we all know that rodents hoard their food ) ”. the prediction went on to say ( every word is true ) “ the influence of the rat curbs inflation ”. as a euro area central banker, i welcome this omen. but coming back to what gathers us here today, 2008 is the year of friendship between france and japan, celebrating the 150th anniversary of franco - japanese diplomatic and economic relations. ambassador iimura has agreed – and i thank him profusely for this – to make the introductory speech to remind us of the importance of this anniversary and the celebrations that will take place throughout the year. in order to celebrate this historic anniversary, we decided to organise this symposium in a place that itself has a very rich history : the golden gallery of the hotel de toulouse. i will mention in passing that 200 years ago this year the banque de france chose the hotel de toulouse for its head office. i will not, this morning, go into great depth about the history of this place. nevertheless, on a day like this, given over to history, i will just say that this gallery was designed in the early 17th century by francois mansart for m. de la vrilliere, a minister of louis xiii, and was then renovated in the style of the day at the beginning of the following century by robert de cotte, the first architect of louis xiv, for the count of toulouse ( the

economic recovery is currently firming and broadening. growth has been steady for, as i speak, 14 quarters in a row and 5 million jobs have been created since mid - 2013 in the euro area, although unemployment is still too high at 9. 6 %. this recovery is neither fast nor vibrant enough but it has prevailed in spite of a number of global and domestic shocks. [ slide ] growth in the euro area was slightly higher than in the united states in 2016, and should not be very far off in 2017. next steps for monetary policy so what should we do next? it is clear that the current macroeconomic environment does not call for a recalibration. our current monetary policy stance remains fully appropriate based on current information, as mario draghi has stressed, and should not be adjusted before we see more concrete signs that inflation can be sustained at levels closer to our target. for the future, on the most appropriate way to reduce the intensity of our accommodation when it becomes warranted, two principles should in my view guide us : these are prudence and effectiveness. we need to be prudent, because the recovery is still fragile. this amounts to asking whether the adjustment of inflation towards our target of below, but close to, 2 % would continue without our monetary stimulus. at present, the ecb ’ s governing council does not think this is the case. underlying inflation, without oil and food prices, remains below 1 % and should, according to our forecasts, gradually pick up to 1. 8 % in 2019 according to the pace of wage increases. we also need to be effective, in the sense that, among our combination of various instruments, we should withdraw last the measures that are mostneeded to secure a sustained adjustment in the path of inflation consistent with our target. we will continue to assess the situation with great pragmatism. there is no predefined split between the doves and the hawks on the governing council, as is sometimes claimed. i am confident that our future strategy, as the present one, will be the result of a collective discussion and a cohesive decision. b. institutional framework in parallel, the institutional framework of the euro area has been improved in response to the crisis. member states have secured key steps to reinforce the resilience of the euro area for the future. with the european stability mechanism ( esm ) introduced in october 2012, they have established a powerful crisis management mechanism for the euro area. with