some of the largest global financial institutions. these institutions may also be tempted to take excessive risks when they come under pressure from heated competition and shareholders ’ demands for value. of course, the prudential authorities approve of high returns on equity, but systematically aiming for returns on equity of 15 %, 20 %, or more while world growth averages 3 % to 5 % could make institutions more vulnerable. actually, the search for profitability should not induce institutions to resort to extreme gearing in which debt replaces capital, or distort portfolio structures by undue focus on high - yield financial assets which also entail a high degree of risk. nor should it lead them to curtail operating costs excessively, thus reducing the resources devoted to internal control. on credit markets, the financial position of banks can also be seriously jeopardised if they are tempted to reduce margins drastically in order to maintain or increase their market share, or if they make insufficient provisions during cyclical upturns. more generally, some of the most widespread management methods are not entirely without risk : • the accounting practice of marking - to - market most of the assets in credit institutions ’ balance sheets renders them more vulnerable to price fluctuations. the spread of market valuation through the concept of “ fair value ” could make banks ’ total assets and profits highly volatile. this is why french prudential authorities have reservations about this method. • in the same vein, the asian crisis has highlighted the limits of systematically resorting to rating agencies, which can reinforce the herd behaviour of markets. these ratings, which can never be perfectly accurate and up - to - date, should be taken for what they are : just one of several instruments for risk management. • the turbulence surrounding the asian crisis also clearly showed that the models used for managing complex derivatives do not adequately take into account abrupt gyrations in one or several markets. and lastly, the public authorities must meet new challenges. • in general, the default of the ltcm fund in september 1998 underscored the risk of contagion between financial systems. however, the resolution of the crisis demonstrated the ability of the monetary and prudential authorities to undertake effective, coordinated and pre - emptive action which prevented it from turning into a full - blown financial crisis. • the increase of bond markets, shorter durations for interbank financing and the growth of derivatives [ such as structured bonds with index - linked yields ] challenge the involvement of the private sector in the resolution of international

security and management of the associated liquidity in the context of an integrated, competitive and innovative market for all cashless payments in euro. 3. improving the attractiveness and competitiveness of the paris financial centre the competitiveness of the paris financial centre is an advantage in our crisis exit strategy and one that is important to continue developing – particularly after the announcement of bis central bankers ’ speeches ice ’ s takeover bid for nyse euronext, which could substantially change the role of the financial centre ’ s players and generate new opportunities. it is essential that efforts undertaken to consolidate and develop market infrastructures as well as market and post - trade services be intensified. from this point of view, 2013 will represent an important step forward with the full deployment of the offer of clearing and triparty collateral management services for repo transactions in euro that has been developed with paris ’ s principal financial operators, banks, clearing and settlement infrastructures and the banque de france. we will also strive to take advantage of new opportunities as they emerge, particularly in the areas of services for financing, investment and settlement in increasingly international currencies ( such as the renminbi ) and infrastructures for enhancing market transparency ( such as data warehouses for the repo market for example ). 4. supporting the economy by offering financing under the best possible conditions the last point i would like to make is also crucial for economic recovery : it concerns lending to the economy. the downward trend that has been observed for some time is primarily due to a fall in demand. but we must of course ensure that the offer of financing remains sufficiently broad so that smes and mtes, who rarely have access to market financing, can weather the current difficult economic period without encountering additional difficulties. in particular cash facilities must remain sufficiently available and the conditions under which they are offered should not be systematically tightened. in fact, our quarterly survey of several thousand smes show a regular contraction of the rate at which smes ’ requests for cash facilities are fully granted. in the last quarter of 2012, this rate was only slightly higher than 50 %. the same is true, although to a lesser extent, for mid - tier enterprises ( mtes ). i therefore enjoin you, in general terms, to avoid reducing lending to the economy, which would aggravate the situation of companies and make the necessary economic recovery more difficult. * * * ladies and gentlemen, i have no doubt that you are ready to meet these challenges – particularly as you