difficulties, coped with the need for capital strengthening, and suffered a sharp drop in profitability. their initial, underlying soundness, also a reflection of supervisory action, has enabled them to withstand the shock. however, overcoming the crisis once and for all will necessitate a further, protracted effort. i have described the steps that are ineluctable, on which intermediaries must take action without delay. in addition, with the farsightedness demanded of all parties, the problem of the quality of ownership structure and governance must be addressed, bearing in mind the interest of the real economy and the stability of the banks themselves. the decisions of the ecb governing council, aimed at safeguarding the effective transmission of monetary policy within the euro area, have preserved the liquidity of the banking system, contained the financial market distortions caused by the sovereign debt crisis, and countered fears for the solidity of monetary union. we evaluate the correspondence between monetary conditions and economic outlook with the greatest care. monetary policy can do much, but by itself it cannot get us out of the crisis. investors ’ fears have abated since the tension was at its height, but they have certainly not vanished. the quality of national economic policies and the completion of the reform of european economic governance moving towards full monetary, banking and fiscal union and, further down the road, political union as well will be decisive. italy must not lower its guard. the international investors continue, rightly, to concentrate their attention on our ability to keep the public finances in balance and energetically pursue the goal of increasing potential growth. the recurrent tensions are a reminder of how fragile the situation remains. the yield spread between italian and german government securities is still wider than is consistent with the fundamentals and potential of our economy. its further reduction could facilitate banks ’ funding and the revival of lending to the economy on more advantageous terms. the return to balanced and rapid growth of our economy must be pursued even more resolutely. keeping the public finances in balance is a prerequisite to this, not an bis central bankers ’ speeches impediment. only the full implementation of comprehensive and systematic reform, certainly a challenging task, can ensure the necessary gains in competitiveness and thereby favour the expansion of employment. the cornerstones of the reform have been identified : we must invest in knowledge, provide higher - quality public and private services, fight illegality and promote competition. we have barely embarked on this course ;

francois villeroy de galhau : looking up to achieve a financing union speech by mr francois villeroy de galhau, governor of the bank of france and chair of the board of directors of the bank for international settlements, at the eurofi high level seminar 2022, paris, 23 february 2022. * * * ladies and gentlemen, it is a great pleasure for me to open this edition of eurofi today in paris, and i extend my warmest thanks to didier cahen and david wright for their tireless efforts that allow us to gather in this beautiful hotel du collectionneur. today i will indeed be speaking about a collection – not of fine arts, but rather of national banking and financial systems. unfortunately, such a collection is nothing to rejoice about, it is rather an achilles heel. but let me start with a few words about ukraine. we are obviously monitoring closely the geopolitical developments, and their possible economic and financial implications. let me already stress that the direct exposure of french financial institutions to russia remains limited, but the ssm called all european banks to enhanced vigilance on cyber risks. we will assess in our governing council in march the more indirect consequences on inflation and growth, and we will be facts driven : more than ever, optionality – about the right monetary stance – and flexibility – to guarantee the right monetary transmission – are the two names of the game for our policy. a few days ago, on 7 february, we celebrated the thirtieth birthday of the european union and of the maastricht treaty. i was personally present during the signature of this treaty, which promoted “ the strengthening of economic and monetary union, ultimately including a single currency ”. we have successfully established a monetary eurosystem, however a real financial eurosystem must now develop. let me therefore share some proposals on the banking union and the capital markets union ( cmu ), which are the two cornerstones for such a financial eurosystem. we are all aware the banking union is for 19 countries, and tomorrow 21, while the cmu is for 27. but allow me to mix them today with a common core – the euro area – and a common purpose – the right funding of our economies. i will quote two thriller books today. you may rightly think of the postman always rings twice : andrea enria and myself already conveyed this message quite plainly regarding the banking union during the last eurofi session in september.