united states. 4. what direction should macroprudential policy take? to guard against the risk of a turn in the credit cycle, the high council for financial stability already announced in september that it would raise the credit protection reserve ( called the countercyclical buffer ) to 1 %. in 2023, the economic slowdown calls for a balanced macroeconomic policy : it must protect, without being procyclical or restrictive, in a context of monetary tightening. this could mean " pausing " the countercyclical buffer at 1 % – but not easing 3 / 4 bis - central bankers'speeches it. we will also keep the " structural " measures in place regarding lending conditions for housing loans ; and we will remain very vigilant regarding the detection of systemic risks, especially in commercial real estate and the non - bank segment. 5. should we postpone our efforts on climate risks in the short term? the climate transition is at risk of being overshadowed and delayed by the mounting financial risks and the energy crisis, with a temporary increase in the use of fossil fuels to replace russian gas. yet the climate risks we face have not subsided, far from it : if the climate transition is put off and carried out in a disorderly manner, the associated costs to our economies will be all the greater. the current context of uncertainty and volatility means that we should increase our vigilance regarding all risks, including those related to the climate, by making progress on the disclosure of climate - related information – which will become compulsory for european banks in 2023 under esg pillar 3 – and on how to operationalise transition plans and stress tests. on this latter issue, three european supervisory bodies will carry out an essential stress test in 2024 to assess in particular the transition risks to the entire financial sector linked to the implementation of the " fitfor - 55 " package. the idea that we could make a short - term trade - off between climate risks and economic and financial risks is misleading : the two are unfortunately increasing in parallel, and, in the longer term, the russian crisis is yet another reason for us to accelerate our energy diversification and sovereignty through the use of non - fossil sources. what we need then, over the next two to three years, is to chart a " path of compatibility " : if we are to be consistent, any measures to support non - fossil fuels, on the supply or demand side – the famous " price shields " – must remain targeted and

francois villeroy de galhau : how solid is our financial system in the new economic landscape? speech by mr francois villeroy de galhau, governor of the bank of france and chairman of the autorite de controle prudentiel et de resolution ( acpr ), at the conference of acpr, paris, 5 december 2022. * * * ladies and gentlemen, it gives me great pleasure to welcome you to another acpr conference, which this year naturally focuses on the theme of " supervisors in the face of uncertainty ". russia's war against ukraine is unfortunately continuing, and there are no indications as to how long it will last or how it will end. it is creating an uncertainty shock, and will probably, over the longer term, create a new macroeconomic and financial landscape ( i ). this is the new prism through which we need to view the challenges of financial stability, and, like light, it splits them into a spectrum of five questions on the french financial system ( ii ). i. what we know – and don't know – about the new landscape : three returns the return of inflation and rising interest rates. inflation has accelerated over the past few months, reaching 10 % in november in the euro area and 7. 1 % in france, which is far too high and well above the inflation target. as a result, we, the central banks, are working steadfastly to bring inflation back towards 2 % in the next two to three years. the ecb governing council has increased its policy rates by 200 basis points since july : we have moved closer to the neutral rate which we estimate to be around 2 %, and which we should reach at our next meeting on 15 december. let us be clear : this rate rise is good news for banks and insurers, who have long been critical of low rates. financial institutions want the rise to be orderly : it is, very much so ; but this does not mean it should be too slow, or predetermined. it is still too soon to talk about a " terminal rate " : we will decide what is necessary following a meeting - by - meeting approach ; and we do not steer market rates, which are sometimes excessively volatile. the return of volatility in the markets, starting with commodity markets where margin calls reached historic highs this summer. in equity markets, after the corrections observed since the start of 2022, valuations remain relatively high. fixed