two systemically important banks were resolved and the resulting institution was recapitalised. domestic and external payment restrictions were imposed. and the government has started implementing a sizeable fiscal adjustment, and is carrying out some important structural reforms aimed at improving the functioning of the economy in a durable way. those measures were painful and they have imposed a large short - term cost on the economy and cypriot society. but they have started to pay off. the restructuring and recapitalisation of the banking sector have led to a significant improvement in the health of the financial system. payment flows have normalised, while the domestic payment restrictions have been gradually lifted. the current account deficit of the balance of payments has almost been eliminated, from a peak of 15. 6 % of gdp in 2008. the general government deficit has fallen by around half from a peak of close to 6 % of gdp in 2012, consistently over - performing the fiscal targets in the programme. those achievements are impressive and command respect from the rest of europe. they have helped cyprus to regain access to international capital markets earlier in 2014. looking forward, the successful completion of the comprehensive assessment should not be seen as the end of the efforts to put the banking sector in the best position to serve the cypriot economy. overcoming the legacy of the crisis requires further crucial steps. the quality of bank assets continues to be a cause for concern. at more than half of the total loan portfolio, non - performing loans ( npls ) are the highest in the euro area, and among the highest following any recent banking crisis. addressing the high level of npls is critical. npls are a major hurdle to the provision of credit to the economy, as the attention of banks is diverted to the work - out of legacy problems instead of looking forward to profitable business opportunities. exposure to the fragile property market remains in banks ’ balance sheets. the new foreclosure framework is necessary for the resolution of the high levels of npls. taking into account last week ’ s decision of the supreme court, it is now time to make a major push in this regard. fundamental drivers do not fully explain the npl levels observed in cyprus. under the legislation prevailing before the recent reform, there were insufficient incentives for borrowers and lenders to find solutions to restructure debt. the foreclosure process in cyprus could take 10 to 15 years, much longer than in most other countries. in the absence of a credible perspective of the collateral being seized, borrowers ’

christian noyer : the end of the financial dictatorship? introduction by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, to session 5 “ the end of the financial dictatorship? ”, aix - en - provence economic forum, aix - en - provence, 6 july 2013. * 1. * * firstly, is finance really a dictatorship? this question isn ’ t new : already petronius, in roman times, at the start of our modern era, asked : “ what use are laws when money is king? ” the question seems rhetorical, and you can sense in its resignation that the latin writer ( who, incidentally, was born in the nearby city of marseille ) was already worried about the difficulties of establishing the primacy of politics over finance. i ) it is true that the world of finance does have considerable powers : • the power to create and support economic development. in its most traditional forms, this is finance ’ s most crucial role – and power : it is an essential cog in the wheel of economic activity, allocating capital, supplying credit and enabling the management of risk. more than just “ the sinews of war ”, it can be seen as the lifeblood flowing through our veins. • but also a highly destructive power : it was the unchecked sophistication of finance and the excesses this caused that lay behind the 2007 - 2008 financial crisis, a crisis that subsequently transformed into an economic, social and political crisis. limited losses on subprime loans ultimately led to the destruction of millions of jobs throughout the world, and the links between finance and the real economy were cruelly laid bare. ii ) but finance can certainly not be considered “ all powerful ” : in my opinion, the world of finance only has the political power that state governments choose to give it. • granted, the difficulties some countries were facing, notably in the euro area, were exacerbated by financial market pressures – think back to the attacks on italian debt in the summer of 2011. but if the markets were able to exert this pressure, it was because those countries had, in a sense, put themselves at their mercy by demanding that they finance their ever - expanding public deficits, even during periods of growth. • in nearly all the crises faced by the euro area since 2009, it is true that market reactions were often brutal and even extreme. but these reactions were frequently