speech by francois villeroy de galhau, governor of the banque de france and president of the acpr acpr conference of 22 november 2017 bank resolution : from regulation to implementation ladies and gentlemen, i am delighted to welcome you to this new conference organised by the autorite de controle prudentiel et de resolution. for the first time, the morning of this conference will focus on bank resolution. this is always a somewhat paradoxical subject : if we are spending time on it today, it is in the hope that we will never have to deal with it in the future. " si vis pacem, para bellum ", as the romans said... just as they prepared for war to maintain peace, we must be fully prepared for a crisis if we are to avoid it. but i would like to start by noting an important victory : that of paris and france, which will welcome the european banking authority. it represents an achievement for a highly motivated and dynamic team, as well as a threefold recognition, i. e. that of the attractiveness of france and the paris financial centre today ; the richness of a financial ecosystem that boasts one of europe's most impressive talent pools ; and lastly, i believe, the quality of the public regulators and the supervisor – the acpr. and the european banking authority's decision to move from london to paris clearly bodes well for other post - brexit financial relocations. there is no better time to talk about resolution, as this year, 2017, has seen the adoption of the first resolution decisions and the management of several crisis cases, which have been a baptism of fire for the single resolution mechanism. the banking union, which is a major step forward for the euro area, is now operational, based on a single rulebook and – already – two pillars : the single supervisory mechanism ( ssm ) since the end of 2014 ; and the single resolution mechanism ( srm ) since the beginning of 2016. those two pillars should be supplemented by a third pillar, deposit insurance, for which we will need to find practical and reasonable compromises. but today i would like to focus on two cross - cutting challenges that are less often discussed : consistency and consolidation. as you will see, both involve resolution. however, it is my goal this morning to go further and consider the completion of the banking union as a whole. i. the first challenge is to achieve better consistency between regulation, supervision and resolution,

a certain degree of financial fragmentation persists. in particular, our very accommodative monetary policy stance is not fully transmitted to the financial conditions of small and medium size enterprises at the periphery. in this sense, the current degree of financial fragmentation within the euro area remains an obstacle to the smooth transmission of our monetary policy. hence we are currently considering the introduction of additional unconventional monetary policy instruments that would further reduce financial fragmentation. this leads me to a couple of remarks on the institutional design of the european monetary union. inspired by the hard lessons of history, the founders of emu were especially concerned that governments might weaken the union through either debt monetisation or via a sovereign default that would cause financial instability in the area. these concerns were more than legitimate and led to the now famous maastricht criteria. but one channel was not envisioned at the time : the possibility that a major financial shock could jeopardise fiscal sustainability, through large - scale bail - out programmes. in the case of the euro area, characterised by a high degree of financial integration, ignoring this risk exposed us to major disruptions. this analysis echoes maurice obstfeld ’ s keynote address and i believe that our response to these risks is fully in line with his recommendations. indeed, we have learned a great deal from the past five years and have made progress at an unprecedented pace. emu is now firmly on the road to a banking union. to a large extent, this is the very institutional mechanism that was lacking in the first place. our omts have limited the scale of financial fragmentation and have greatly reduced the risk that increasing spreads might end in sovereign defaults. but the euro area needs an institutional framework capable of preventing the recurrence of such crises, essentially by decoupling financial risk from sovereign risk. the banking union thus consists of three major pillars : a single supervisory mechanism, a supranational resolution mechanism, and a unified system of deposit insurance. for now, the first pillar of the banking union is the most advanced, but the other two are also in the pipeline and need to be pursued. let me now conclude. euro area macroeconomic governance is now stronger than it was before the outbreak of the crisis since it has been put on a sounder institutional footing. our institutional architecture is about to be completed, which will help to prevent the resurgence of a new sovereign debt crisis. our unconventional policies were able to address market fragmentation and the ensuing financial disruption, hence facilitating the