francois villeroy de galhau : franco - german experiences and challenges in the euro era relations - speech by mr francois villeroy de galhau, governor of the bank of france, at the europadialog, organized by the investitions - und strukturbank rheinland - pfalz ( isb ), mainz, 21 march 2017. * * * madam minister - president [ ms dreyer ], madam finance minister [ ms ahnen ], mr spokesperson [ m. dexheimer ], ladies and gentlemen, i am delighted to be here with you today in mainz, and i sincerely thank you for inviting me. on a more personal note, i am here as a committed european and a friend of germany. i am particularly attached to the franco - german friendship : i am french and live in paris, but my family ’ s roots are in a neighbouring land, saarland, where my family has lived since the end of the 18th century and where its porcelain manufacturing company villeroy & boch forms part of the german “ mittelstand ”. when i spend my holidays in saarland and i go north, i admire trier ; or east, neustadt an der weinstraße. and when i come fortnightly to participate in the ecb governing council, i am very close to your beautiful town of mainz. there is no doubt in my mind that “ we, the citizens of the european union, have united for the better ”, as stated in the berlin declaration of 25 march 2007. this was for the 50th anniversary of the treaty of rome, and this is still just as true four days before we celebrate its 60th anniversary. and yet, our unity may appear threatened today : euroscepticism is on the rise, driven by populism throughout europe ; brexit triumphed in the united kingdom last june ; and the new american government freely expresses its reservations about the european union. in these times of turmoil, we mustn ’ t lower the european flag. let us remember the formidable progress that we have made since our two countries decided to share their destinies by signing the treaty of rome, along with belgium, italy, luxembourg and the netherlands. today, in europe, we share three major economic assets : the single currency, the single market and our common social model. we have built them together and we can be proud of them. this will be my first point. for the future, european unity continues

francois villeroy de galhau : monetary policy transmission speech by mr francois villeroy de galhau, governor of the bank of france, at the annual general meeting of the international capital market association ( icma ), paris, 25 may 2023. * * * ladies and gentlemen, it is a pleasure to deliver this address at this icma's conference in paris, and i would like to pay tribute to your collective contribution to capital markets. let me thank among others bryan pascoe, rene karsenti, mandy defilippo and the icma french regional committee. in particular, icma's emphasis on sustainable finance perfectly echoes our call alongside christine lagarde for a " green capital markets union ". it is an important way forward for europe in the coming years. in the short and medium term, let me focus today on the transmission of monetary policy. in the euro area, inflation has begun to fall back, from 10. 6 % in october 2022 to 7 % in april, after 6. 9 % in march, and is expected to recede by the end of the year. but it will still be too high. and while headline inflation has been declining, underlying price pressures are showing persistence. the governing council has already taken prompt and forceful actions to tighten the stance of monetary policy. the increase in policy rates since 2022 has been exceptionally rapid by any historical standards : 7 hikes in less than ten months, amounting to + 375 basis points. the primary question today is not so much how much further we need to go with interest rate hikes, but how large is the pass - through of what is already in the pipe. overall, evidence shows a quick and smooth pass - through of ecb decisions to broad financing conditions, which is the first step of monetary policy transmission. the growth rate of bank loans to households and firms has slowed due to a combination of higher borrowing rates, lower demand, and - for firms - tighter credit standards. volumes of loans are decelerating, even though growth in outstanding amounts remains positive [ + 3. 3 % in the euro area for mortgages to households and + 5. 2 % for loans to businesses ]. by the way, the growth of loans in france remains significantly higher than in the euro area average. the second step of monetary policy transmission goes from the overall financing conditions to the economy and to inflation. in the textbook theory, tighter financial conditions moderate aggregate demand, and then decrease