an essential factor not only for a sustained recovery of japan ’ s economy but also for the stability of the global economy as a whole, we are watching developments very carefully. after european central bank ( ecb ) president draghi ’ s remarks in july 2012 and the introduction of the outright monetary transactions ( omts ) by the ecb in september 2012, fluctuations in international financial markets triggered by developments in europe seem to have declined substantially. meanwhile, progress also has been made on the financial stability front, with preparations for the asset quality review ( aqr ) and stress testing progressing ahead of the formation of the single supervisory mechanism next year. along these lines, we note that discussions on the need to arrange a public backstop in case of capital shortages resulting from the aqr and stress testing have been moving forward as well. while difficult issues may lie ahead, including establishment of a resolution framework, we are confident that the european authorities will produce appropriate policy responses. bis central bankers ’ speeches in light of japan ’ s experience let me now move on to what we might be able to say based on our experience during the financial crisis in the 1990s in relation to the european authorities ’ initiatives. of course, the situation the authorities face and the primary features of the problem are probably not completely the same as what japan endured in the 1990s. thus, i do not think that japan ’ s experience is wholly applicable, although i hope it will provide some insight. the first point i would like to make is with regard to the difficulty of establishing an appropriate resolution framework. during japan ’ s financial crisis in the 1990s, the japanese authorities were repeatedly criticized for acting too late. admittedly, looking back, we could have acted more swiftly in some areas. however, there seem to be two factors behind the fact that it took time to establish an institutional framework. a trial and error situation was inevitable due to lack of a framework previously, and the overall process involved the need to gain understanding from the public. measures to set up institutional frameworks, especially when it involves public money, are bound to take time. coordination among various relevant parties to compile legislative measures has to be made, and the public ’ s understanding of the necessity for such a framework has to be gained. public understanding of a resolution framework involving public money becomes important, especially in a case where there is a need to actually use or modify such a framework. while the establishment of a framework is taking place, financial markets tend to want immediate tangible

christian noyer : france ’ s banking industry in 2007 – key trends speech by mr christian noyer, governor of the bank of france and chairman of the french banking commission, at the presentation of the 2007 annual report of the french banking commission, paris, 26 june 2008. * * * welcome to the working breakfast organised for the press on the occasion of the publication of the commission bancaire ’ s 2007 annual report today. i would like to take this opportunity to speak to you about the major trends seen in the banking industry in 2007. naturally, the main development last year was the subprime crisis. i will also speak about the lessons learned from the crisis for the future. even though the french banking system ’ s overall exposure to the risks revealed by the subprime crisis turned out to be less severe than in other g10 countries, our banking system was still affected, as can be seen in the decline in profitability. on a more encouraging note, however, french banks managed to maintain satisfactory solvency ratios, testifying to the system ’ s resilience and its ability to cope with a very large - scale and complex crisis. however, in addition to the impact on business conditions, the financial crisis calls for an examination of the robustness of some of the banking activities that developed so rapidly over the last ten years. these activities have complicated the task of risk management in major banking groups. the materialisation of certain risks, the return of volatility on financial markets and uncertainty about the economic outlook have meant that major banks need to make a special effort in three key areas : i ) maintaining adequate capital ratios to cushion them from further shocks, which may still occur, ii ) strengthening their risk management systems and processes, and iii ) pricing credit and liquidity risks appropriately. to explain these developments, i would like to speak to you briefly about the following points. 1. first of all, the french banking system provided proof of its resilience in the face of financial turmoil in 2007. 2. the current economic situation calls for vigilance nonetheless, since banks must be ready to cope with new risks that may occur at any time. 3. finally, as crisis conditions persist, i should like to talk about the main thrusts of the supervisory authorities ’ actions. 1. the french banking system provided proof of its resilience in the face of financial turmoil in 2007 after posting good performances since 2003, the french banking system was hit by the fall - out from