François Villeroy de Galhau: Overcoming the energy crisis - a European perspective (and beyond) Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Paris EUROPLACE Tokyo International Financial Forum 2022, Tokyo, 15 November 2022. *** Ladies and Gentlemen, It is a great pleasure for me to be with you again –physically with you – in Tokyo for this International Financial Forum organised by Paris Europlace. I am honoured to share the closure of this event with my colleague and friend Governor Kuroda. We face together the awful Russian war in Ukraine, and its consequences on energy and economy. I will start with a brief description of the macroeconomic outlook in the euro area, and with our monetary policy normalisation (l). I will then focus on sustainable finance in France, Europe and Japan: it has a key role to play in our ecological transformation, more needed than ever (II). I. Macroeconomic outlook in the euro area  A. Despite recent shocks, growth outlook has shown overall resilience so far Let me start with the macroeconomic situation in the euro area, which has so far shown resilience. In 2021 our economy had strongly recovered from the Covid crisis: growth had reached 5.2 %, and even 6.8 % in France. We Europeans have remarkably overcome the Covid crisis, which hit us early and strongly. We achieved this through enhanced European unity, for instance in purchasing vaccines, and in implementing common budgetary measures to support our recovery (SURE(i) and Next Generation EU programmes).
In short, very rapid and uncontrolled growth in the fringe (i.e. not primary) banking sector came home to roost when the first oil shock hit in 1973, delivering a blow to the economic prosperity enjoyed by the UK since World War II, reducing the value of bank assets and revealing a significant mismatch of borrowings and lending that resulted in a liquidity, and subsequently solvency, crisis. The secondary banks were especially affected, having been able to expand their balance sheets rapidly using 14  wholesale markets , much as Northern Rock did just over thirty years later. The number of affected banks surpassed fifty  15  in total and the Bank coordinated a significant effort – the  so-called ‘Lifeboat’ operation – to assist the troubled institutions, whether through shareholder support, marriages to stronger banks or support directly from the Bank. The most important revelation, however, was that these institutions had been allowed to go effectively unsupervised by the Board of Trade in the first place. Such a circumstance arose due to something seemingly quite simple – the lack of a definition of a “bank” in UK law. Under Schedule 8 of the aforementioned Companies Act 1948, certain firms could be exempted from publishing their accounts in full on the grounds that they were banking companies. On this basis, certain banks – in almost all cases, the well-established ones – were subject to Bank oversight.