Christian Noyer: Some thoughts on the crisis Address by Mr Christian Noyer, Governor of the Bank of France, to the Congress of the National Federation of the Crédit Agricole, Nice, 21 October 2008. *  *  *  Mr Chairman, Ladies and Gentlemen, It is a great pleasure for me to participate in the Congress of the National Federation of the Crédit Agricole. I am happy to be here, surrounded by colleagues and friends in the unique atmosphere that characterises your meetings. Nowhere else is there such a blend of conviviality and the greatest professionalism. That is why I would like to take this opportunity to present to you some thoughts on the current situation. For over a year, the global financial system has been in crisis. The crisis is not over. But, as you know, everything is being done to contain its effects. And central banks are at the very forefront of this combat. It is still too early to draw all the lessons from these events. It is however vital to start reflecting on the experience of the last few months. Even more in periods of tension than in normal times, action and reflection should reinforce one another. It is at the very moment of managing the current crisis that we lay the foundations for the future financial system. I am very happy to be able to share a few thoughts with you and in your company.
Interbank markets have started to return to normal, but there is still some way to go. To this end, central banks have mobilised considerable firepower. The action taken in the past two days represents the culmination of a process that has been underway for over a year. Central banks have adjusted their operational frameworks in four different areas: First, the maturity of their facilities has been extended, to help to unfreeze the money market beyond the short-term segment. Second, the range of eligible counterparties has been broadened to allow adequate provision of liquidity throughout the system. Third, the range of assets eligible as collateral for refinancing operations has been expanded. Lastly, extremely close international coordination between the different monetary authorities is ensuring that the actions taken by each of them is part of a consistent overall strategy, while taking account of the specific features of each monetary area. These exceptional measures should greatly contribute to restoring confidence and the smooth functioning of money markets. All in all, combined with the coordinated cut in policy rates on 8 October, they are now enabling European banks to obtain short-term refinancing at a rate that is 120 basis points below that of just 10 days ago. Governments are also now intervening to support banks' solvency and resilience. Thanks, in particular, to France's leading role, Europe is organising itself. Since the Paris Declaration issued by the member countries of the euro area, Europe has a sound and consistent action plan. It is already being applied and comprises three main aspects.