paris europlace international financial forum – paris, 9 july 2019 new frontiers in finance speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ; + 33 6 88 56 54 03 ). page 1 sur 5 ladies and gentlemen, it is a pleasure to be with you today : this paris - europlace international financial forum is more and more “ the place to be ”, as france and paris are increasingly stimulating first - movers in europe. the theme of this forum – “ new frontiers in finance ” – prompts us to look towards new territories that we have to explore and conquer. regarding finance, i will focus on two of them : digitalisation and green finance. but before looking at the future, let me stress two prerequisites for the present. * * i. two prerequisites for the present my first message is to welcome the new european team, nominated in brussels last week, starting with christine lagarde and ursula von der leyen. once again, albeit at the last minute, albeit under the threat of a crisis, europe has proved itself to be decisive and innovative. now, it is time to begin the fundamental work on a true financial eurosystem. let us look beyond brexit, and beyond the somewhat disappointing debates on the euro area budget. the top priority on the european agenda should be a financing union for investment and innovation, which will channel our abundant private savings through a combined banking union and capital markets union. firms need this in order to raise equity and find european venture capital ; keeping a european capacity in investment banking is a strategic imperative. financial players need this in order to conduct cross - border mergers : european banking consolidation is overdue, and it is indispensable, not to reduce competition – quite the opposite – but to reach the critical mass necessary to make digital investments and allow savings to circulate. and, lastly, the euro area needs it in order to finally have an effective economic stabilisation tool to weather the shocks affecting some countries : “ private risk sharing ” is effective between states in the united states. if one doesn ’ t want a fiscal union – duly noted –, one must make even more resolute progress on the capital markets union. we have talked enough about this, and it is now time to take concrete page 2 sur 5 measures : this must be the ambition

a whole. much of the slowdown in aggregate demand this year has been centered in the household sector, and the ability and willingness of consumers to spend will be an important determinant of the pace of the recovery in coming quarters. real disposable personal income over the first five months of 2011 was boosted by the reduction in payroll taxes, but those gains were largely offset by higher prices for gasoline and other commodities. households report that they have little confidence in the durability of the recovery and about their own income prospects. moreover, the ongoing weakness in home values is holding down household wealth and weighing on consumer sentiment. on the positive side, household debt burdens are declining, delinquency rates on credit card and auto loans are down significantly, and the number of homeowners missing a mortgage payment for the first time is decreasing. the anticipated pickups in economic activity and job creation, together with the expected easing of price pressures, should bolster real household income, confidence, and spending in the medium run. residential construction activity remains at an extremely low level. the demand for homes has been depressed by many of the same factors that have held down consumer spending more generally, including the slowness of the recovery in jobs and income as well as poor consumer sentiment. mortgage interest rates are near record lows, but access to mortgage credit continues to be constrained. also, many potential homebuyers remain concerned about buying into a falling market, as weak demand for homes, the substantial backlog of vacant properties for sale, and the high proportion of distressed sales are keeping downward pressure on house prices. two bright spots in the recovery have been exports and business investment in equipment and software. demand for u. s. - made capital goods from both domestic and foreign firms has supported manufacturing production throughout the recovery thus far. both equipment and software outlays and exports increased solidly in the first quarter, and the data on new orders received by u. s. producers suggest that the trend continued in recent months. corporate profits have been strong, and larger nonfinancial corporations with access to capital markets have been able to refinance existing debt and lock in funding at lower yields. borrowing conditions for businesses generally have continued to ease, although, as mentioned, the availability of credit appears to remain relatively limited for some small firms. inflation has picked up so far this year. the price index for personal consumption expenditures ( pce ) rose at an annual rate of more than 4 percent