fese convention – “ europe ’ s future in global capital markets ” paris, thursday 22nd june 2017 closing remarks by francois villeroy de galhau, governor of the banque de france contact presse : clemence choutet ( 01 42 97 74 51 ; clemence. choutet @ banque - france. fr ). page 1 sur 5 ladies and gentlemen, it is a pleasure to be with you today to close this fese convention. when reflecting on europe ’ s future in global capital markets, we all agree that the brexit vote last year has significantly shifted the european landscape. one year on, it is still bad news for all of us, but much worse for the united kingdom itself, and each day more so. faced nevertheless with brexit, we should at least be consistent. and the eu - 27 is being so, starting with mr. macron and ms. merkel : we are hoping for a positive agreement, but there can be no cherry - picking in the single market, and no access without common rules. furthermore, i ’ d like to stress two imperatives : first, do not let sources of systemic risks for the eu grow outside the eu ; second, speed up the creation of a “ financing union for investment and innovation ” to boost productive investment thanks to a better circulation of savings across borders. let me elaborate on these two imperatives in some more detail. * * 1. do not let sources of systemic risks for the eu grow outside the eu let me start with the first imperative. the main issue here is that some financial market infrastructures, which are key for the eu, will soon become off - shore to the eu as a consequence of brexit. this is particularly problematic when these infrastructures may put the eu ’ s financial stability at risk : some central counterparties ( ccps ) for instance can be considered to be “ too big to fail ” entities, especially since clearing is mandatory. this is a specific concern for the euro, compared to other currencies, as european savings management is almost totally dependent on london - based financial players and market infrastructures. and yet we cannot reasonably expect that these global financial market infrastructures take into account, in their operations and risk management, the financial stability of the euro area, on top of the financial stability of their own jurisdiction. page 2 sur 5 therefore, since, regrettably, london will soon be outside the eu, the current setup

financing solutions, supporting the scaling - up of smes. europe is lagging far behind in this area : such financing only represents 68 % of gdp in the euro area compared with 128 % in the united states in the fourth quarter of 2016. naturally the building blocks of such a financing union already exist with the capital markets union, which supports the diversification of private financing ; the juncker investment plan, which channels public and private investment into the real economy ; and the banking union, which tackles the fragmentation issue. these initiatives have to be brought together into the financing union in order to go beyond administrative or bureaucratic borders, create synergies, and therefore give new impetus to this agenda. think for instance of a real european venture capital market to promote equity financing, which is the most effective way to finance innovative businesses at different stages of maturity ( seed, venture, and growth ). more specifically, progress towards a financing union for investment and innovation is needed in three key areas : - first, completing the banking union. this means, as a priority, finalising the banking union ’ s second pillar, namely the single resolution mechanism. within a strong banking union framework, banks in the euro area will thus be able to engage in cross - border consolidations on a sound and safe basis and therefore contribute further to reducing financial fragmentation. - second, thoroughly reviewing the incentive schemes for cross - border investments, notably by promoting further convergence of tax and page 4 sur 5 regulatory regimes. enhancing the free movement of capital within the eu requires addressing a wide range of legal impediments, including enhancing the predictability of insolvency frameworks, eliminating fiscal biases that penalise equity, and further increasing the transparency and harmonisation of accounting rules for small businesses. - third, expanding the supply of financial intermediation services. this can take the form of new pan - european savings products and investment vehicles – more long - term and risk - oriented – or new market initiatives in green bonds, private placement or securitisation for instance. complementary steps could include creating pan - european venture capital funds and leveraging on the development of fintechs, while maintaining a high level of consumer protection and efficient conduct of business rules in a digital environment. * * let me conclude with a general remark. after brexit and mr. trump ’ s election, many expected a euro area crisis. so far, exactly the opposite has happened : european growth is accelerating, at close to the pace of