. – on the other hand, and that concerns the economy as a whole, it is essential to foster the development of a market financing as a complement to bank financing. although the process has already started, the speed and extent of the shift differs across countries and sectors. the development of a more balanced funding structure is a necessarily long process, which requires a strong commitment and support from public intervention. in europe, a series of initiatives, led by the authorities, are under way to revive the moribund securitization market but also to develop the private placements markets. on securitization, incidentally, allow me to note that it suffered unduly in europe from the us experience, while having been much less prone to default. more generally, the european commission ’ s capital markets union project will support the increase in funding flows, the diversification of risks and a better allocation of resources. bis central bankers ’ speeches this shift towards more market - based financing entails two main implications from a financial stability perspective : – first, the proliferation of regulation brings uncertainty to market participants. the analysis of the cumulative impact and the interactions between regulations is still in its early days but it must be continued. vigilance is indeed required to ensure that the implementation of reforms does not result in a reduction of activities that are vital for financing investments and firms. i notably think of the market - making activity which shows signs of decline, partly due to the regulatory costs. this decline needs to be monitored in a financial system where we are promoting market financing and where market making is key for issuers and investors. – second, the development of alternative sources of funding, outside the banking system, brings a necessary diversification. yet the risks associated to disintermediation are clear, notably a limited assessment of risks by investors or less ability to address difficult situations and gaps in supervision. in parallel, reintermediation by non - banks raises level - playing field questions linked with uneven regulation and supervision across sectors and countries. to discuss these important issues, we are extremely fortunate to gather an exceptional panel today, with : • mrs sheila bair, chair of the systemic risk council, former chair of the federal deposit insurance corporation ( fdic ), who is obviously a prominent regulator. dear sheila, your work to build a more robust financial system, that serves the economy, is particularly impressive and your views on how to make it even more resilient are very sharp ; • we also have mrs

council of state conference – paris, 14 november 2023 monetary sovereignty in the 21st century speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ) and deborah guedj ( deborah. guedj @ banque - france. fr ) page 1 of 6 mr president of the constitutional council [ laurent fabius ], vice - president of the council of state [ didier - roland tabuteau ], general [ andre lanata ], madam section president [ martine de boisdeffre ], ladies and gentlemen, i am very honoured to have been invited to take part in this conference on sovereignty. i realise, however, that this has very little to do with me personally, but a great deal to do with the object that i represent : money is the natural and almost obvious participant here. money has been a standard attribute of sovereignty, ever since the theory first advanced by jean bodin in the 16th century that : “ only he who has the power to make law can regulate the coinage ”. i this power to create money was for a long time embodied in the person of the king : in france, philippe iv the fair ( 1285 - 1314 ) was the first to mint gold coins bearing his effigy. but it was louis xiii in 1640 who first named them after himself : the term “ louis d ’ or ” even lasted throughout part of the revolution, before gradually being replaced by the “ napoleon ”. through metonymy, the “ sovereign ” is the name of an english gold coin first minted in 1489. this equivalence between money and sovereignty is therefore centuries old, but i would like to revisit it this evening from two angles : ( i ) first, by looking at the relationship between monetary sovereignty and political sovereignty, and two of its contemporary metamorphoses ; and ( ii ) by examining the most acute, but probably less perceived, challenge that we face today, which is that of the renewed competition from private “ currencies ” – due to technology – vis - a - vis public money. i. monetary sovereignty and political sovereignty the assertion of monetary sovereignty was one of the most powerful instruments in the construction of national unity and state sovereignty. the gradual centralisation of the minting monopoly – from the middle ages onwards page 2 of 6 in france – and the promotion of national currencies, were