new cohorts on the labour market. however, they could be mitigated by active labour market policies, such as an appropriate training policy, which have a very effective and targeted impact on human capital depreciation. 1. 2. second, in europe, the ecb has significantly loosened monetary policy in recent years even after the limits of conventional monetary policy have been reached. but this has been no ordinary recession. it has also been associated with an acute financial crisis and history has shown that recessions associated with financial crises can have an even longer lasting impact on economic performance. during financial crises, credit constraints can tighten drastically for banks and for firms and households which in turn harms physical capital and labour productivity growth. financing constraints may lead to increased firm defaults. this may not be detrimental to long - term growth if it has a “ cleansing effect ”, if non performing firms and equipment disappear and free resources for innovative young firms 3. however, it may also hit young, innovative and risky firms, which are more fragile and financially dependent 4. according to foster, grim and haltiwanger 5, reallocation in the united states during the great recession r. jackman and r. layard, 1991. “ does long - term unemployment reduce a person ’ s chance of a job? a time - series test, ” economica, london school of economics and political science, vol. 58 ( 229 ), pages 93 – 106, february. a. maravalle, m. - e. de la serve. and g. verdugo, 2014. “ the euro area beveridge curve in the post - crisis period : increase in structural unemployment since 2010, ” quarterly selection of articles – bulletin de la banque de france, banque de france, issue 36, pages 95 – 109, winter. r. j. caballero and m. l. hammour, 1996. “ on the timing and efficiency of creative destruction, ” the quarterly journal of economics, oxford university press, vol. 111 ( 3 ), pages 805 – 852. m. ouyang, 2009. “ the scarring effect of recessions, ” journal of monetary economics, elsevier, vol. 56 ( 2 ), pages 184 – 199, march. l. foster, c. grim and j. haltiwanger, 2016. “ reallocation in the great recession : cleansing or not?, ” journal of labor economics, university

initiatives, especially on shadow banking. indeed, the regulatory priority is no longer the solvency of banks, but the liquidity of non - banks : we stressed these financial stability risks in our washington meetings last week. tomorrow, we at the banque de france will publish the 2018 financial stability review that is focused on fast - growing market - based finance. i stress that we have to better monitor it, test it – through liquidity stress - tests –, and regulate it when necessary. financial stability is our common good, and we should also face a more subtle threat to it : debt complacency on a global level, in the context of accommodative monetary policies which will be less warranted in the near future. global debt was already about 200 % of world gdp before the crisis ( 2007 ), but is up to 220 % today. sound fiscal policies for public debt, responsible lending by financial actors for private debt and – if needed – macroprudential measures, should react against this debt complacency. 1 / 3 bis central bankers'speeches more broadly on multilateralism, we should continue to work together to preserve the world economic and trade order. we europeans, shoulder - to - shoulder with canada, japan and others, must resolutely defend international economic relations based on commonly respected rules and multilateral institutions : we are all aware that an escalation of protectionist threats from the united states would dampen growth everywhere. the recent uncertainty is probably already having some negative effects on investment : you saw it in the british economy since the brexit vote in 2016. and real tariffs would hurt more : according to most calculations including ours, a 10 % increase in tariffs would diminish world trade by double digit figures, and decrease global gdp by more than 2 %, starting in the united states. 2. the finance of tomorrow let me now turn to my second point : the finance of tomorrow in an interconnected world. let me first remind you that france and the united kingdom have already developed a similar – and i believe promising – approach to regulating innovation. call it “ proportionality ” in paris or “ sandbox ” in london. but it is the way of solving an apparent paradox : for many, regulation is the enemy of innovation. in fact, regulation has a role to play in order to boost and secure innovation at the same time. to give an example, by allowing third parties to safely access payment data, the revised