, inflation expectations will deteriorate and generalised inflation will accelerate. we cannot simply sit back idly, the stakes are too high. however, dealing with supply side shocks always poses difficulties for monetary policy makers. the situation we are facing now differs in important respects from the standard case which sees either a shock which is expected to reverse, in which case not much action is required, or a discrete one - off change in relative prices. in the latter more difficult case, the usual response is to look through the inevitable impact on measured inflation, and once this change is through the system, inflation should ideally return to its normal levels. if inflation expectations are firmly entrenched within the inflation target range, then very little response may be required from the monetary authorities, whose main objective under such circumstances would be to ensure that this process does not feed through to more generalised inflation pressures. the challenge, however, is that we are not being faced by a discrete once - off event. rather, we are facing what can best be described as a rolling or continuous shock. international oil prices have been on an upward trend since 2004, apart from some moderation in the latter half of 2006. oil price increases have almost consistently surprised on the upside, requiring a continuous revision of our assumption and thus the forecasts. indications are that food price inflation is expected to continue to remain high for some considerable time. this is most definitely not seen to be a temporary phenomenon. similarly, electricity price increases significantly in excess of the average inflation rate are expected to become a multiyear event, as the process of increasing generating capacity is rolled out. these are unusual developments. unusual responses might be necessary. things, it seems, might get worse before they become better. we are going through bad times. the magnitude of these inflationary pressures has been such that a breach of the target was inevitable. whereas we have to accept that we will be unavoidably outside the target range for longer than we would wish, we are determined to bring cpix inflation back to within the target range within a reasonable time period. if we seem to be abrogating our responsibilities, inflation expectations could get out of hand, price - setting and unit labour costs could become excessive and we could experience an inflation spiral. as noted earlier, we have already seen evidence of second - round effects, deteriorating inflation expectations and elevated wage demands coming through, and these have required a response to prevent inflation getting out of hand. 4. has the monetary

a minority of investors. in the case of liquidity, however, increased life expectancy, lower pension replacement rates and the greater health risks associated with living longer are all pushing french savers to adopt longer and longer investment horizons. we need to be able to offer them suitable savings products : ones that are less liquid, with or without a long - term capital guarantee, and that allow savers to benefit from the higher returns offered by equities over the long term. a crucial point is to avoid any tax distortions that might mean these products are penalised more than liquid and risk - free investments. this level playing field in terms of taxation should also apply to the companies that are financed : in other words we need to avoid making debt financing more attractive than equity financing. c ) the third focus is a precaution : it is vital that we increase transparency and provide savers with more information on the risk / return profile of their investments over different time horizons. financial intermediaries ’ role is precisely to pool individuals ’ savings, and transform safe liabilities – i. e. savings – into riskier assets – i. e. investments. but it is also the role of financial professionals to inform their customers about the type of investments they are making, including via multi - vehicle life insurance policies ( and notably unit - linked policies ). as for disintermediated financing, such as crowdfunding, which is attracting increasing numbers of savers, this is indeed a useful tool, but customers need to be informed of the risks they are taking and encouraged to diversify their assets. let me conclude with two more general remarks : – to better identify “ the various forms of savings on offer ” – the topic of today ’ s conference – we also need to look at the issue from different perspectives : a french perspective, of course, but also a european perspective, as many of the solutions we need can be found at this level. i am convinced that by combining the work of the european commission ’ s capital markets union, the juncker plan and the banking union, we can create a genuine financing and investment union within the euro area, one that benefits both savers and businesses alike. this is another promising channel for improving the allocation of household savings, the pooling of risks and the financing of the economy. – this debate on savings is both technically complex and impassioned – deservedly so as it concerns the wealth of ordinary french citizens. parliament has worked extensively on