financial intermediaries, public intervention is since last fall also aiming to support banks ’ financing and own funds. this is a significant shift. needless to say, restoring liquidity remains a pressing priority. inter - bank markets have shown gradual signs of improvements. yet, there is still some way to go. to this end, central banks have mobilised considerable ammunition. a process underway for over a year has culminated in the central banks having adjusted their operational frameworks in various areas. the maturity and currency of their facilities have been expanded. the range of eligible counterparties has been broadened. the tender procedures have been modified with a view to ensure unlimited amounts of central bank money. the list of collateral for refinancing has been widened. as for the eurosystem, they have been providing liquidity at a fixed rate for unlimited amount. enhanced international coordination between monetary authorities is ensuring that their actions are part of a consistent overall strategy. these measures are highly exceptional with indeed unprecedented monetary easing leading key policy rates to historically low levels and the adoption, in certain cases, of unorthodox monetary policy actions. as such, they should greatly contribute to restoring confidence and a smooth functioning of money markets. governments have moved aggressively to support banks'solvency and resilience. since the paris declaration by euro area member - countries, europe, under the leadership of france until year end, has been acting according to what i consider a sound and consistent action plan. i won ’ t enter into the details. just bear in mind the three following elements. first, authorities are extending guarantees to banks ’ refinancing so that they can, in turn, properly finance the economy. second, significant reforms of accounting rules are now being implemented. basically, these reforms allow banks to transfer instruments previously marked to market to portfolios where that will no longer be the case. they also provide for greater flexibility in methods used to value assets whose market has shut down. third, and lastly, governments have confirmed their willingness, when warranted, to step in and support banks ’ capital. what about france ’ s actions? government and parliament very quickly put meat on the bones of the european principles. a new bill has been passed, which provides for two things. first, it sets up a eur 320 billion funding vehicle to guarantee banks ’ medium - term refinancing ( i. e. up to five years ). this vehicle is strictly supervised by the french government and the banque

products which until then were deemed of the highest quality. the demise of the “ new ” securitisation chain highlights two fundamental realities. the first one is that far from being spread across the whole system, credit risk was implicitly or explicitly concentrated in the hands of specific institutions, foremost among which were the major investment banks. hence the successive waves of depreciations of structured products, imposed by accounting rules, with these depreciations in turn fuelling doubts about counterparty risks and solvency, liquidity constraints and further falls in asset prices. the second reality is that recent financial innovation served mainly to increase leverage in the system. signs of this are many. banks ’ balance sheets became overstretched. off - balance sheet vehicles without any equity proliferated. monoline insurers guaranteed volumes of structured products way beyond what their equity position could bear. as you know, leverage works both ways. it amplifies gains as well as losses. amplified gains took the form of the us property boom. amplified losses are with us now. the whole deleveraging process still underway has meant, since its start, that financial institutions unable to raise capital had to suffer very considerable depreciations on some products, which in some instance wiped out their net worth, bringing them to failure. against this background, what about french banks? of course, they are not immune to the crisis. direct or indirect exposures to toxic assets implied that they too had to record writedowns ; sometimes substantial ones. the liquidity shortage is also hurting and the prolonged market disruptions have raised their refinancing costs. that said, our banks are sound and robust and still exhibit high solvency ratios, above minimum prudential requirements. overall, they remain profitable. this is so not least because they benefit from regular sources of income. they are universal banks ; and as such much less vulnerable to funding market conditions. sound and revolving sources of profits are a vital asset at the current juncture. in this context, french banks can play an active role in the ongoing restructuring of the international financial sector. all in all, beyond sometimes serious tensions and incidents, french banks are now reaping the benefits of the major advances in productivity and innovation they have made over the last two decades. public policy during the crisis both from a public and a private sector perspective past months have seen a marked change in public policy. having been in a first phase geared exclusively to providing liquidity to