–, it applies to only 13 banks in the united states, leaving a myriad of regional but sometimes significant banks, including svb, with much lighter requirements. according to our estimates, and in line with a study carried out by yale university, svb's short - term liquidity ratio ( lcr ) would have fallen short of the basel requirement of 100 %. another point concerns the allegedly inadequate treatment of latent but not recognised losses in the current prudential framework. first off, we should all bear in mind that all liquid assets included in the lcr are factored in at their fair value. in addition, unrealised losses have to be disclosed in financial statements ensuring transparency. 1 / 3 bis - central bankers'speeches therefore, there is no issue here. on the capital side, we have to be very mindful of the risk of increasing the volatility of banks'own funds if unrealised gains and losses were to be fully reflected in capital for securities held at amortised cost. that said, and according to the imf, the impact for eu banks would be 5 times smaller than for us banks. svb's failure argues for an effective and broader implementation of the basel iii requirements, rather than an eternal effort to refine them – and thus delay their application. in short, more basel iii now – whatever the reluctance of some european banks has been -, rather than a hypothetical and delayed basel iv. speaking of regulation, let me add a word on two potential points of attention, and first the single name credit default swap ( cds ) market. at the end of march, the lack of liquidity of this market and its opaqueness caused an undue episode of financial distress affecting deutsche bank. we should not accept that such a dysfunctional market entails such systemic risks : as a first step, we need to establish a better understanding of the transactions, the participants and the risk of correlation with other financial instruments like at1 and deposits. second, we must acknowledge that the increased speed of deposit outflows – due to technology, combined with the power of social networks – raises new challenges : should we improve deposits insurance, and / or adjust some liquidity ratios? none of these changes is obvious, to say the least, but none should be taboo. ii. supervision : lessons from an active euro area model fair enough about implementing basel iii ; but then comes the next suspicion : credit suisse failed despite being basel iii compliant

infrastructure needs and investment bottlenecks in commodities production. fourth remark. we can identify two reasons for this situation : • the first is the general and exceptional uncertainty weighing on the global economy. uncertainty makes liquid and safe assets more attractive. it makes investment less attractive. it can therefore partly explain the phenomena that i have mentioned. • the second reason is more structural : a malfunctioning of our financial intermediation mechanisms. there are doubts about the solidity of banks in numerous countries. debt markets are profoundly disrupted and international movements of capital have been highly volatile over the last two years. fifth remark. the intervention capacities of central banks are of course limited. they can remedy temporary market disruptions and situations of illiquidity caused by uncertainty. recently they have intervened to an unprecedented extent, as reflected in their balance sheets. but they cannot permanently substitute financial markets and banks when financial intermediation malfunctions. likewise, low or zero interest rates can contribute to stabilising bis central bankers ’ speeches the economy in periods of crisis, but if maintained over a protracted period, they can create distortions, encourage the formation of bubbles and create risk for long - term investors. indeed, on this topic, i would like to make one observation. the question of monetary financing of deficits was raised by david thesmar. such financing cannot in any way resolve the problem of the dislocation between savings and investment, either at the national level or at the global level. some central banks have developed large - scale public debt acquisition programmes. they have done so for reasons relating to immediate macroeconomic stabilisation... to go beyond the zero - interest rate limit. the eurosystem as well intervened on a much smaller scale when malfunctioning debt markets prevented the effective transmission of monetary policy impulses. there is not a single central bank that is seriously considering the monetisation of deficits with the more or less declared intention of reducing the weight of debt via inflation. in my view, this notion is nothing more than a financial analyst ’ s fantasy. in fact, over the last six months, we have seen constant confirmation of the anti - inflationary stance of monetary policy with, for example, the fed actually establishing a quantitative definition of price stability for the first time ( in fact, identical to the one used by the eurosystem ). sixth remark. our immediate priority is therefore to construct or reconstruct the mechanisms and structures of a sound