this is, obviously, unrealistic in the current environment. but these are potential avenues for progress and debate. international liquidity the provision of international liquidity has been severely disrupted during the crisis. emerging ( and some industrialized ) countries have suffered from acute dollar liquidity shortages which had to be remedied, inter alia, through a network of currency swaps between central banks. the crisis is a powerful reminder that liquidity – both domestic and international – can never be taken for granted. how will international liquidity be provided in the future, and by whom? these are not new questions. over the last ten years, the build up in foreign exchange reserves in emerging economies has been spectacular, which is a sign that the supply of international liquidity was seen both as insufficient and uncertain. more recently, governor zhu, from the people bank of china has raised the issue of reserve currencies. according to governor zhu, current arrangements for liquidity provision are a source of instability and have played a role in causing the crisis. governor zhu has mentioned, in particular, the intrinsic contradiction embodied in the famous “ triffin dilemma ”. because the dollar is the major reserve currency, international liquidity supply depends on the us running a sufficiently large current account deficit which, by itself, aggravates global imbalances and creates instability. governor zhu suggested that the role and status of the sdr be enhanced, with the long term objective of creating a “ super reserve ” currency. however, international liquidity provision should now be considered in a broader framework. the triffin dilemma goes back to a period when international capital markets were poorly developed. by then, international liquidity was limited to instruments used to settle payments between official monetary authorities. it was represented by claims on such official entities. by contrast, in today ’ s world, most international liquidity is privately provided and represented by claims on private institutions. interbank markets play a crucial role in this process. the more capital markets become integrated at the short end, the more international liquidity is provided by the private sector. as a consequence, there is a strong continuity and complementarities between domestic and international liquidity. both depend on the willingness of counterparties to extend credit to each other. both are subject to aggregate supply and demand shocks with sudden shifts in risk aversion or liquidity preference. both result from leveraging and deleveraging by private institutions ( adrian and shin, 2008 ). when markets seize,

and by the way that is why financial regulators – including banque de france and acpr – pay close attention to the proposed merger between the london stock exchange and deutsche borse. * * * let me draw a parallel to illustrate the situation. in france and in europe, we have the raw materials – savings. we have the processing industry – the financial sector. but we are missing two links in the economic chain : downstream, we need to open up new opportunities in productive investments via a broader range of processed savings products ; and upstream, we need stable and legible rules to allow the industry to conduct its business. therefore, i see two ways forward. first, better channel our abundant savings towards productive investment. as i said, the core challenge for increasing innovative investment is to boost equity financing, both in france and in europe : – in france, this means new savings products and an appropriate trade - off between risk and return. indeed, the share of households wealth invested in risky assets is more than three times lower in france than in the us : 77 % of gdp versus 241 % of gdp. but french and european savers are more attached to security – or capital protection – than to liquidity. therefore professionals should offer them savings products that are less liquid, with some long - term capital guarantee, and that offer the best equity performance over time. a crucial point is to avoid any tax distortions that might penalise these products more than liquid and risk - free investments. low interest rates are not the disease, but the symptom of an imbalance between savings and investment ; and low interest rates are probably an opportunity to speed up the cure towards productive investment. – at the european level, we need to build an ambitious “ financing and investment union ” ( fiu ) bringing together existing initiatives – namely the juncker plan, the capital markets union and the banking union – which currently work in isolation and therefore do not bring sufficient results. we definitely need to put the pieces of the puzzle together to create a multiplier effect towards private risk - sharing in europe : with more equity financing and more cross - border flows. the second way forward for raising investment and growth in europe is to rapidly stabilise the regulatory environment for banks, eight years after the financial crisis. however, in finalising the basel iii reforms we need to avoid two pitfalls. first, as has been stressed by bis central bankers ’ speeches the ghos and the g20, the completion of reforms should