francois villeroy de galhau : rising temperatures - inflation, climate change and digital transformation speech by mr francois villeroy de galhau, governor of the bank of france, at the world economic forum, virtual, 19 january 2022. * * * ladies and gentlemen, it is a great pleasure to have the opportunity to deliver a few remarks at this virtual edition of the world economic forum today. as you may have expected from a central bank governor, my remarks will first be about inflation, with a comparison of the situations in europe, the united states and japan. i will then briefly touch upon the two great transformations underway, ecological and digital, which will shape our future. by the way, inflation and climate change share a common feature : rising temperatures … which could be the subtitle of my introductory statement. i. inflation in europe, the united states and japan the strong rebound in 2021 was obviously excellent news for our economies, which have suffered on a scale never before experienced by current generations. over the last few months, inflation has accelerated, primarily because of tensions in energy and shortages in commodities and intermediate goods. its magnitude varies across countries : in december, inflation stood at 7. 0 % in the united states, higher than the 5. 0 % observed in the euro area, and in sharp contrast with the 0. 6 % observed in japan in november. this common transatlantic trend calls for a common vigilance from central banks, and a change from the very accommodative monetary policy rightly – and successfully – pursued in 2020 to face the covid crisis. that said, let me stress some intercontinental differences. the us economy recovered faster and more strongly than that of the euro area, notably due to the very large fiscal stimulus after the covid crisis. in december core inflation, excluding food and energy, was 5. 5 % in the united states and 2. 6 % in europe, showing that the dramatic increase in energy prices in 2021 does not stand as the sole explanation for this recent surge in overall inflation. the labour market is also much tighter in the united states : the labour force participation remains lower than before the crisis, and there is a large decrease in unemployment, to 4. 2 % in november 2021 compared with 7. 2 % in the euro area. these differences explain why monetary policy accommodation is removed more quickly in the united states with the fed seemingly contemplating three significant shifts in a row : tapering of purchases, lift off of interest rates,

christian noyer : a new regulatory framework for a new financial system speech by mr christian noyer, governor of the bank of france, at a round table discussion at the university of paris - dauphine, paris, 11 december 2008. * * * ladies and gentlemen, it is a great pleasure for me to take part in this round table discussion. today, the prevailing view is – and justly so – that it is necessary to rethink financial regulation. there are two reasons for this : a ) financial markets and banks are, more or less strongly, confronted with problems of asymmetric information ; b ) operational inefficiencies may arise, leading, in some extreme cases, to the seizing up of certain market segments. needless to say that these imperfections are interconnected. in many respects, the financial crisis is the expression of these imperfections. three examples can be used as an illustration. the underestimation of risk and the mispricing of assets during the upswing of the financial cycle show that markets may generate excess investment in certain sectors of the economy ( e. g. the us real estate sector ). furthermore, it appears that financial innovation and the change in banks ’ economic models have resulted in a significant increase in information asymmetries and, more importantly, in lower incentives for economic agents to pay attention to these asymmetries. lastly, the fact that some market segments seized up during the crisis suggests that some infrastructures necessary for their functioning are lacking. to simplify, i believe that the logic underlying the current regulatory system consists in ensuring the financial stability of market segments, but without adopting an overall approach. however, the crisis has forced us to acknowledge that this fragmented approach to regulation does not necessarily ensure the stability of the entire financial system. during this crisis, the fact that financial institutions had considerably increased their use of leverage and that risk was concentrated among a relatively small number of banks was neither well assessed, nor well captured, nor prevented by regulation. in view of this failure and in order to mitigate the impact in terms of financial instability, government interventions were designed, not to stabilize the situation of any particular institution, but to prevent systemic risk from materialising. as a result, we now require macro - prudential regulation. this naturally leads us to address the issue of the scope of financial regulation. who should be regulated? the problem is not new ; it is also complex. like me, you will have noticed