lessons of the crisis will trigger some rethinking here and there. finally, the debate on whether monetary policy should also aim at financial stability must give more consideration to the awkward interaction between instruments and the diversity of accountability regimes. both create the potential for additional confusion about the ultimate objectives of each policy. it seems to me that most of the discussions are conducted under the implicit assumption that price stability will be as easy to maintain in the next decade as it was in the past. so, there would not be much to lose in “ diverting ” some of the power and credibility of monetary policy to seeking financial stability. it is very clear that this assumption is severely tested, perhaps sooner than we thought. it will be important, in this environment, to maintain clarity of purpose and robustness in institutional arrangements in order to limit the risk of weakening the benefits of central bank independence, which were so hardly won over the last decades. bis central bankers ’ speeches

christian noyer : france ’ s banking industry in 2006 – key trends speech by mr christian noyer, governor of the bank of france and chairman of the french banking commission, at the presentation of the 2006 annual report of the french banking commission, paris, 29 june 2007. * * * welcome to this press breakfast, organised for the release today of the 2006 annual report of the commission bancaire. i would like to discuss the key trends that characterised france's banking industry in 2006, not just in terms of structure and performance but also the regulatory environment in which it operates. it is clear that the framework for financial activity and banking risk management has changed in recent months, confirming the ever more urgent need for new methods of risk assessment and for appropriate supervision that can react swiftly to these changes. in my view, several factors are important in this respect. first, in a highly international context, banks'performances are increasingly being judged from the outside, especially by shareholders. those judgements are sometimes so harsh that they can have a direct structural impact. consequently, banks can no longer afford simply to post excellent results – as again was the case in 2006 for most major international banks, especially french banks. they must also make sure that the underlying quality of those results is sound. to do this, they must pay special attention to the way they manage risks internally and plan their strategic expansion, and to their capital adequacy policy. second, the economic and financial context in which french banks are operating is also a source of risks. indeed, lessons must be learned from the slowdown in the usa, amply illustrated by the housing downturn, which resulted in higher risk in the sub - prime segments of the retail banking market. it should also be acknowledged that financial markets could become more unsettled. if higher risk aversion were to encourage greater use of risk transfer products, this could drain liquidity from some markets and undermine the efficiency of banks'management. from a supervisory perspective, the problem is all the more acute since the growing reliance on credit risk transfer instruments tends to make it harder to assess the type and degree of risk that banks actually bear when, for example, they arrange complex transactions. third, the regulatory environment for french banks is changing radically as a result of the basel ii accords. banks that have adopted the advanced approaches to risk management must put models in place – usually as early as january 2008 – for the internal rating and assessment of credit risk, market risk