the securitization of assets, have enabled intermediaries to better diversify and manage risk. financial derivatives have revolutionised global capital markets. the emergence of substantial markets in forward, futures, options swaps and other derivative instruments has significantly altered the conduct of borrowing, investment and risk management activities. the significant economic benefits of financial derivatives include : ( i ) permitting the unbundling and trading in risks, ( ii ) the ability to hedge price risks and to synthesise investments with greater efficiency and lower costs, ( iii ) and an increasing liquidity of and trading in financial assets. i would expect this process of constant innovation to continue in the decade ahead. first, because innovation is a natural feature of modern financial markets. the expansion of the credit derivatives in the last five years illustrates how fast new instruments cans develop and expand. and, second, because markets are still incomplete, in the sense that some risks cannot be efficiently hedged or transferred in the current environment. b incomplete markets and intergenerational risks one interesting example is demographic risk, and more generally, the efficient transfer of risk between different generations. currently, markets may not be well equipped to deal with intergenerational risk that simultaneously affects different generations living at the same time. many developed countries are going through a demographic transition, sometimes called the old age crisis. according to the world bank ’ s 1994 report for instance, by 2030 there will be 1. 4 billion people in the world aged over sixty, versus 500 million in 1990. so, we are experiencing a transition to an economy with many more aged dependents relative to the active workforce. it seems to me that the old age crisis will prompt us to invent institutions to deal with this kind of risk or maybe to create additional investment products. for instance, the increase in life expectancy could generate risks that are not efficiently hedged in the financial markets or that are to difficult to manage by households. beyond pure demography, some risks could be more efficiently shared between generations. in his stimulating book – “ the new financial order ” - robert shiller suggests to expand the principles of financial management “ to include the society as a whole ”. for example, he advocates the creation of “ macro markets ” on which long - term claims on national incomes and occupational incomes as well as for illiquid assets such as real estate would be traded. one of his most thought - provoking ideas is “ intergenerational social security ”. current old age

and with the expectations of savers. prompted by the increase in life expectancies and the need to prepare for retirement, savers are adopting increasingly long - term investment horizons : they are more 2 acpr, 2015 annual report, october 2016. page 4 sur 7 concerned with the security of their investments than with liquidity. taking inspiration from the new euro - croissance policies, it makes sense to offer savers new, complementary forms of saving products that are less liquid and include some form of long - term capital guarantee, and that allow them to take advantage of the higher returns offered by equities over the long run. we also need, at the very least, to avoid any tax distortions that might penalise these products more than liquid and risk - free investments. given the current low rate environment, the acpr is taking care to ensure that insurers remain alert to the risks of adverse developments and take appropriate measures to counter them. for this reason, as part of the 2015 preparations for the own risk and solvency assessment ( orsa ), it asked insurers to conduct an in - depth analysis of the impact of persistent low rate scenarios on their solvency, finances and ability to meet their commitments. in addition, this year eiopa is conducting a europe - wide stress test. for france, the scope of this exercise is particularly broad : the acpr has extended it to cover 90 % of the market, compared with the 75 % specified by eiopa. unlike bank stress tests, insurance stress tests are not “ fail or pass ” and as a result will not lead to the application of additional capital requirements. the findings, to be published by mid - december, will make it possible to determine precisely how exposed the insurance market is to the risks linked to the low rate environment. the orsa exercise and stress - tests will enable the acpr to identify weaknesses, and we fully intend to discuss any counter measures to be put in place with the establishments concerned. lastly, there is the proposal, under the draft sapin law, to extend the powers of the french macroprudential authority, the hcsf, to the insurance sector. there is no point trying to turn this into a controversy ; indeed doing so would only be counterproductive for the protection of policyholders. let me say this page 5 sur 7 unequivocally : there is no threat to the savings of french investors, and no question of making changes to