turnaround in the market, very considerable depreciations have been recorded on structured products, which, for many banks, have exceeded their level of capital. their inability to recapitalise has led to the failure of some of them. how, in this environment, can we assess the state and performance of our banks? they are, of course, not immune to the crisis. they have direct or indirect exposures ( notably via us monolines ) to structured products. they have had to make write - downs, sometimes substantial ones. they are also suffering the impact of the drying up of liquidity, the seizing up of some markets and, more generally, the rise in their refinancing costs. that said, our banks are sound and profitable. it is worth recalling four facts that, in the current turmoil, are sometimes overlooked : first, the solvency ratios of french banks are high, well above the minimum requirements set by prudential regulation and the levels of their european competitors ; second, overall our banks remain profitable : over eur 7 billion in the first half of 2008. we are ensuring that these earnings are reported using the strictest standards. in all likelihood, this trend – of lower but positive profits – should continue for the rest of the year. third, our banks have regular sources of income. they are universal banks. this sets them apart from banks in some other countries that depend exclusively, or for the most part, on the financial markets. our banks have sound and revolving sources of future profits. this is a vital asset at a time when it is difficult to raise capital by issuing shares on the market. lastly, the “ manoeuvrability ” of our banks remains excellent and they are now ready to play their role in the possible restructuring of the international financial sector. these facts give me reason for confidence. beyond the sometimes serious tensions and incidents that have affected the recent period, our banks may be justly proud of the progress in terms of productivity and innovation that they have made in the last two decades, which now positions them to cope effectively with turmoil that may occur in the future. public policy during the crisis over the past two weeks, we have witnessed a marked change in public policy with regard to financial institutions. having hitherto been exclusively geared to providing liquidity, public intervention is now also aiming to support banks ’ financing and own funds. this shift in stance is significant. the problem of liquidity remains crucial at this stage of

but it is not a silver bullet. ultimately, we should leave it to bank boards and management to decide what business model is best for the future. i appreciate that the german legislative proposal on introducing a ring - fence leaves some leeway in that regard. finally, there is evidence that the corporate culture of banks is changing. risk management, for example, has gained a more prominent role in the organisational structure of some banks. efforts to strengthen risk governance have been undertaken as well, but further improvements are necessary. the manipulation of benchmark interest rates by traders is a case in point. withholding or clawing back variable parts of remuneration packages of employees who were involved in such fraudulent activities can only be a first step. in the future, i expect to see further changes in institutions towards the promotion of sounder risk cultures. bis central bankers ’ speeches