francois villeroy de galhau : the banking union ─ time to move forward again speech by mr francois villeroy de galhau, governor of the banque de france, at the eurofi financial forum, ljubljana, 10 september 2021. * * * i would have liked to be in ljubljana today, but i extend my warmest thanks online to david wright and didier cahen for making this event possible. during the acute phase of the crisis, eu governments and the ecb did the right thing in supporting economies, so that we can now bounce back quickly. the european banking system proved its resilience, and contrary to many exaggerated fears, there will be no tsunami of corporate insolvencies, and hence no major rise in npls. however, now that firefighters have been successful, it is time to turn to our architects to start building again : europe must finally unlock the full potential of its banking union. this morning i will be in the same vein as andrea enria ’ s impressive speech yesterday, which i fully welcome and support. today, i will first discuss where we stand including the ongoing deadlock in the banking union, before elaborating on the pragmatic solutions we can come up with. i. banking union : it is time to move forward again where we stand. after a strong initial impulse having achieved an efficient first pillar – supervision –, banking union now lacks momentum and remains incomplete. let us be frank : the project has come to a complete standstill. while the initial ambition was to create a unified area where european banks could operate efficiently, we are still struggling with intra - european borders. the european banking sector remains far too fragmented. in 2019, the market share of the top five us banks was 43 % [ of domestic consolidated assets ], compared with only 23 % for the top five in europe. there are still too many roadblocks to cross - border restructuring : geographical ring - fencing practices prevent groups from managing liquidity and capital efficiently on a consolidated basis. as a result, fewer than ten cross - border m & a deals have been signed since 2014, compared with 180 domestic deals over the same period, a historic low : at present, banking union has meant that our banks are actually not more pan - european. this paradox is intolerable. why it remains crucial. the creation of the banking union itself was a direct response to the sovereign debt crisis in europe and its impact on the bank - sovereign nexus in a

action plans, and agreeing on the institutions, and timelines in which, to implement them. again we require your active involvement, commitment and ownership of the strategies and action plans that we will set out here today, to take financial inclusion and microfinance to the next level in fiji. the next level for microfinance – change, innovation and new initiatives this workshop is also an opportunity for us to change, improve, be innovative and come up with new approaches and initiatives that will further extend financial services to the unbanked in the rural, remote and maritime areas, including the unbanked in urban and semi - urban areas. i certainly look forward to seeing the action plans and innovative strategies that will come out of this workshop. our action plans should be measurable and achievable and most importantly they should be implemented with commitment. there are many microfinance initiatives we can explore and apply in the local context. i know that some of you already have innovative plans in the pipeline to take financial services outreach to the next level. i look forward to seeing their introduction in the market. may i also add that whilst considering microfinance initiatives, it is also important that thought be given to consumer protection of the poor and the unbanked. bad experiences can often deter the very ones that we are trying to help. concluding remarks in closing, it is my hope that we all continue to be passionate in our drive towards greater financial inclusion. when success is achieved, it is something we can look back on with satisfaction, knowing that we have contributed to the development of our people ’ s welfare and our country. we need to work together to develop strategies in extending financial services outreach to the next level. i am hopeful that we can set the agenda for scaling - up and accelerating financial inclusion and microfinance. as part of the process, i also call on all the participants of this workshop to set and commit to your own targets, develop your own objectives, and allocate a certain budget for financial inclusion and microfinance. the less fortunate in our society deserve an opportunity to pull themselves out of poverty through empowerment. with these words i wish this meeting every success. vinaka bis central bankers ’ speeches