monetary policy should remain accommodative ”. 3 ) what about the risks? i talked earlier about the risks of doing nothing : we need to take action in order to bring inflation back up towards 2 %. that said, we also need to keep a close eye out for any possible negative side - effects of our monetary policy, notably for financial stability. we are actively monitoring the financial cycle, including in france where the task falls to the haut conseil de stabilite financiere ( high council for financial stability ), set up in 2013 : i will be taking part in its 8th meeting at the finance ministry tomorrow. for the time being, there are no signs of any bubbles forming in the main financing markets : on the whole, developments in the equity markets appear in line with corporate profit forecasts, while evolutions in bond yields also seem consistent with the outlook for inflation and growth. nor are there any signs of excessive credit growth in the financial system. nevertheless, we remain vigilant over all aspects of the current macroeconomic and financial environment. in the last hcsf communique in december 2015, for example, we indicated, on the subject of the property market, that “ the price adjustment in the residential market since 2012 appears appropriate, whereas commercial real estate prices remain high ”. we are ready, when needed, to take action with macroprudential measures, to prevent and mitigate any systemic risks that might arise. monetary policy is thus doing a great deal to counter weak inflation and support economic activity – it is our duty and we will continue to do so with steadfast resolve : we are consistent in our objective, ready to act with the right instruments, and alert to any possible risks. however, i would also like to stress that “ monetary policy cannot be the only game in town ”. other economic policies also have a role to play. this is precisely what the members of the g20 reiterated in shanghai on 27 february : “ monetary policies will continue to support economic activity and ensure price stability, consistent with central banks ’ mandates, but monetary policy alone cannot lead to balanced growth ”. where there is sufficient margin to do so, fiscal policy must support demand – this is not currently the case in france, but it is in other countries in europe. moreover, structural reforms remain absolutely vital in france, to encourage creations of jobs and of businesses and thus bring the economy back to full potential. our country can ’ t wait any

christian noyer : it was vital to break the adverse feedback loop between bank and sovereign risk interview with mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, in les echos, 17 september 2012. * * * do the ecb ’ s announcement to purchase sovereign debt and the german constitutional court ’ s approval of the european stability mechanism mark a turning point in the crisis? these announcements were welcomed by the markets and the outlook now appears much clearer. the european stability mechanism is a key factor for strengthening the cohesion of the euro area and demonstrates that the euro is here to stay and irreversible. it will help ailing economies return to competitiveness and growth. the governing council ’ s decision to purchase, subject to appropriate conditions, government debt is reassuring for at least three reasons : purchases are potentially unlimited, which should end speculation about the possible collapse of the euro area ; the strict conditionality will oblige countries to pursue their fiscal consolidation efforts ; lastly, these purchases fall squarely within the ecb ’ s mandate as they are conducted in the secondary market and aim to ensure the proper transmission of the policy stance to the real economy. the ecb has played its role. what must governments now do? euro area member states need to restore their credibility and they are already making efforts to do so. some have had to implement austerity plans and others, less drastically, are undertaking structural reforms and continuing to reduce their government deficits. this is the case of france. even if these efforts appear moderate compared to those of other countries, they are necessary for our market credibility. brussels has presented its proposals for a european bank supervisory mechanism ; are they in line with your expectations? yes, they are. the developments of the financial crisis have brought to light one of the euro area ’ s fragilities : the link between bank and sovereign risk. following the collapse of lehman brothers, governments bailed out their banking systems and, in doing so, established a nexus between sovereign debt and local banking systems, which interferes with monetary policy transmission. when the euro area sovereign debt crisis erupted, bank refinancing conditions became correlated with sovereign risk, with the consequences that we have witnessed for ailing countries. the large amount of liquidity provided by the eurosystem has reduced this impact, but funding costs have remained very high in some countries. it was therefore essential to decouple sovereign risk from bank