been the chief contractionary force – is in the process of turning around, and that its upswing could be very pronounced. under these circumstances, it was perhaps not altogether surprising that financial markets ’ expectations about monetary policy began to change. they became less sure that we would ease again in may and, in fact, by the time of the meeting the majority of economists surveyed expected no change in interest rates. in our own thinking, we asked the question " what behaviour of ours can most contribute to building confidence? " at the april meeting, knowing that we still had some more work to do to get interest rates down to levels that were clearly expansionary, we had decided that a move larger than some people expected would probably be preferred to a more cautious approach, and might foster confidence. by may, we had three moves in quick time under our belt. we knew that interest rates were not acting as a constraint on the economy, but rather were at levels likely to assist growth. with financial markets slightly more upbeat about the outlook, we felt that a steady setting of monetary policy would help confidence. we were also sensitive to the possibility that, on this occasion, a surprise fall in interest rates could easily cause people to think that " things must be worse than we thought " and prompt the question " what does the reserve bank know that we don ’ t? " such a reaction, had it occurred, would have been counter - productive. what can we say about the future? inevitably, we can say less, i suspect, than you would like! policy has been returned to an expansionary setting, with the easing " front - loaded ". interest rates are close to the low points reached in the two most recent episodes of monetary policy easing. given that fact, and given that we see some promising signs in the economy and financial markets, there is a reasonable chance that the current stance of policy will turn out to be easy enough to achieve the desired results. but equally, while it is reasonable to expect that the promising trends of late will develop into stronger momentum for growth, we cannot as yet be confident. this, in turn, means that we cannot be sure that further monetary policy easing will not be required. the growth outlook rests on various assumptions, not least that international conditions stabilise before too long, and improve somewhat during 2002. that is a reasonable assumption on which to make a central forecast, but we need to be, and are, alert to the possibility of a weaker outcome,

structural transformations is vital for our economy. in this context, the acpr must, of course, remain vigilant with regard to the new risks, but it must also be pragmatic and keep its ear to the ground by maintaining dialogue with the industry. 1 ) good relations between supervisors / supervisees this effective dialogue is illustrated in the joint and active participation in work and talks on insurance regulation, at both european and international level. in the case of the solvency ii review in particular, the outcome is generally satisfactory. evidence recently gathered by the supervisor from the main french insurance groups suggests the review guarantees an overall neutral impact for the french market. these talks, which allowed french insurers ’ concerns to be taken on board as early as possible, will continue to be necessary for drafting the level 2 and 3 texts. this is borne out by the current success of the industry meetings being held to discuss these texts. it is also particularly important that insurers hold extensive talks with the supervisor on commercial practices. indeed, we need to make progress together page 7 of 9 on the rules surrounding the “ value for money ” and distribution of products, because if products are not sufficiently valuable and therefore of interest for customers, there is no justification for selling them. let me illustrate this with the example of unit - linked contract fees : discussions between the acpr and the industry have already led to a moderation of management fees on certain investment vehicles. and france assureurs is now preparing to adopt a first set of proposals specifically on management fees on unit - linked contracts, to identify cases where they are high relative to a market benchmark, and, where necessary, restore the balance in favour of policyholders. this review – for which i will ask the acpr to draw up an initial appraisal by next summer – should allow us to prove, with figures to back it up, that french insurance savings schemes take customers ’ interests fully to heart. this is the essential justification we need to keep a national rather than a european benchmark, in line with your wishes. in addition and at the same time, this review should soon be accompanied by the inclusion of the euro fund portion in the value for money scheme. alongside vice - chairman jean - paul faugere and the acpr teams, i shall personally make sure that progress is made on these two issues between now and next summer. 2 ) simplifications by the supervisor and regulator finally, the supervisor must, of course, ensure