instability also has substantial externalities on the economy, and on social cohesion through unemployment. the recent financial crises have brought the failings of the financial system into focus, not forgetting the impact of new technologies, such as high frequency trading, fintechs, or crypto - assets. but rules have their limitations. an ethical approach is needed if we are to respect the spirit of the rules – and not just the letter of the law – and if we are to make informed decisions when clear rules are not available. in addition to financial institutions'in - house ethical practices, the financial sector must now also consider how society – ngos, the media, fellow citizens included – perceive its activities from an ethical standpoint. clearly, the 2007 – 09 crisis was partly created by an imbalance : too much trust had been placed in ethics, while the rules were insufficient. the weaknesses in the corporate culture of financial institutions were thrust into the spotlight ; incentives to take risks were too powerful and governance was inappropriate. 1 / 3 bis central bankers'speeches certain anglo - saxon expressions perfectly illustrate the period : " too big to fail " created a widespread moral hazard, " tick the box " encouraged overly lax self - regulation through a purely formal compliance with the rules... and in so doing, the " light touch " of the british fsa at the time clearly showed its limitations. since then, i am happy to say that we have significantly tightened up the rules. with the crd iv capital requirements directive and basel iii for banks and, at least in europe, solvency ii for insurers, quantitative requirements have been reinforced to ensure greater resilience, governance of financial institutions has been improved and compensation policies for bankers have been reined in a little. international regulation is our common good. it strengthens a sound financial system. but as we strengthen international regulation, we must not lower our guard in terms of ethics. ten years later, this would generate the opposite imbalance to that of 2007 – 08. in other words, there's a risk that the pendulum could swing back the other way. 2. ethics must permeate the day - to - day practices and culture of financial institutions. over and above the good intentions, declarations and codes of conduct, which did nothing to prevent the excesses that caused the 2008 crisis, the challenge now is for all actors from the bottom to the top of these organisations to adopt an ethical approach. as the " banking conduct and culture

practices, or raising ethical concerns, which is now protected by law since the introduction in france of the sapin ii act. alongside the approach offered by human resources, the permeation of ethics into corporate practices and cultures is achieved through their integration into business strategy, and their monitoring and supervision by the three lines of defence – first, management ; second, ethics and compliance officers ; and third, audit. financial institutions must consider corporate culture as a key strategic element rather than a specific field only intended to provide a short - term response to regulatory requirements. personally, i am also convinced that in the long term, ethics pays, even if it does not always immediately pay in " cold, hard cash ", as the anglo - saxons say. it is only by promoting ethics as a desirable value in themselves that we will obtain the right mix between ethical standards and the regulations necessary for a sound financial system. and that is why the prize being awarded today is no stranger to the banque de france and the acpr. i hope you all enjoy the ceremony. 1 " ethique, responsabilite et strategie d ’ entreprise ", observatoire de la responsabilite societale des entreprises, september 2017. 3 / 3 bis central bankers'speeches