francois villeroy de galhau : the future of the euro area - from the " impossible trinity ” to the " growth triangle " text of the 6th annual tommaso padoa - schioppa lecture by mr francois villeroy de galhau, governor of the bank of france, at the 6th annual tommaso padoa - schioppa brussels economic forum 2017, brussels, 1 june 2017. * * * i am grateful to carine bouthevillain, bruno cabrillac, laure carrel, pavel diev, marine dujardin, pierre jaillet, eloise lecouturier, celine mistretta - belna and edouard vidon for their assistance in preparing these remarks. ladies and gentlemen, it is a pleasure to be here in brussels and to speak in front of such a distinguished audience. for my generation of modest european architects – i was in maastricht 25 years ago – tommaso padoa - schioppa is one of those great – almost mythical – italian figures who engaged in this “ kantian quest for european unity ” 1. so i am honoured to give a lecture named after him. he would certainly have been very pleased that the majority of french people clearly expressed their attachment to the euro on the occasion of the french presidential election. giving fresh momentum to the european project is indeed one of the priorities of the new french president. and although i was invited several months ago, and although the banque de france is fully independent of the government, i like to think that my presence here this morning is a sign that there is renewed interest for the voice of france in europe. europe is once again standing at a crossroads. the 2007 – 2008 global financial crisis and the 2011 sovereign debt crisis in the euro area have left a legacy of foregone growth, high unemployment, and massive public debts. on top of that, europe ’ s security has been directly affected by the scourge of terrorism that targets our population and our values, and moreover we have not yet found lasting solutions to the refugee crisis. and yet, despite all these challenges, support for the euro and the european union is still high : according to the eurobarometer survey, 72 % of euro area citizens support the euro, the highest level since 20042, and more than half of eu citizens feel attached to the european union3. the clearest signs of this continued support for the european project – despite brexit,

interesting to note that in the early 1980s, the share of public and private investment in agriculture was almost equal, but subsequently the share of public investment fell drastically. there was an attempt in the early 1990s to increase the share of public investment, but the impetus did not last long. there was marginal improvement in this share during 2003 – 07 but it declined in the subsequent period. in 2012 – 13, the share of public sector in agriculture amounted to only about 15 per cent of total gcf ( at 2004 – 05 prices ) ( chart 3 ). so, private sector, the farming community itself, was a major driver of growth in the agricultural sector. the union budget 2014 – 15 has rightly recognised the need to revive bis central bankers ’ speeches public investment and has enhanced the sum allocated towards agriculture investment and warehousing. 7. let us now turn to some of the trends in agricultural credit. tenure - wise pattern of agricultural credit suggests that the share of long - term credit in total agricultural credit experienced a secular decline, reaching 37. 8 per cent in 2011 – 12 from 74. 3 per cent in 1990 – 91 ( chart 4 ). focus on crop loans with availability of interest subvention only partially explains this phenomenon. this is a disquieting trend. it suggests a possible neglect of capital formation in agriculture. given that private sector is the major driver of the capital formation and that rate of investment in agriculture, which presently hovers around 20 per cent need to be sustained and in fact raised further, there is a need to give immediate attention to long - term agricultural credit. the issue of sharp decline in project based lendings spearheaded earlier by the nabard also needs urgent attention for improving share of longterm credit. the key thrust areas of such schematic lendings will have to be in areas like production and marketing of protein foods, vegetables & fruits, organic farming, supply chain management and farm mechanization. bis central bankers ’ speeches select trends in rural infrastructure 8. while capital formation in agriculture directly reflects the investment in agriculture, rural infrastructure, a much broader concept, refers to all possible physical and social infrastructure that create a conducive environment for growth in rural areas. several studies confirm the positive link between rural infrastructure and improved livelihoods and productivity and reduced poverty. while almost all rural infrastructure sectors are under state governments, central government spending has also been significant in recent years. overall, the outlay on rural infrastructure has increased over the