In my view, they should not take the current regulatory framework for granted and operate under the assumption that this framework, which was mainly designed before the technological « disruptions » we see currently spreading through the financial system, does not need to evolve. On the contrary, to continue delivering well on their financial stability mandate, through their three classical roles, namely as catalyst, supervisor and service provider, they should aim first at 1/4  BIS central bankers' speeches  promoting the necessary regulatory adjustments so that the ultimate goal of financial stability is well preserved. In other words, we should contribute to providing the market with a sound, adapted and updated regulatory framework, which is, in my opinion, needed to support innovation, and even to foster it. To deliver on such a contribution, an open-minded approach and an in-depth understanding  of innovation is required. To that end, we need to engage with innovators, observe the ecosystem, test and learn. I think it is fair to say that the global central bank and supervisory community is heading in that direction as testified by the recent launch of the BIS innovation Hub. In any case, at the ACPR and the Banque de France, it has been our motto for a while, according to our digitalization strategy. It is indeed in this spirit that we set up in 2016, within the supervisory authority (the ACPR), a dedicated Fintech-Innovation Hub to have a direct contact with innovators and anticipate the effects of innovation trends.
One detailed factor that has complicated monetary policy recently is the effects on measured retail price inflation of regulated and administered prices such as above-inflation rises in utility bills, university tuition fees, rail fares etc. Individually these may be perfectly sensible public policy choices and I do not want to be interpreted as criticising their motivation. But the effect on CPI inflation is important. These prices – which are about 16% of the CPI basket – will contribute around one percentage point to the CPI inflation rate in the next couple of years, largely regardless of what happens to domestic demand. Pushing inflation down to 2% would require very low price rises in the other 84%. The risk of overall deflation is much less likely as a result. At our February meeting we faced, as so often in the recent past, a difficult choice. Should we offer more monetary stimulus, or should we not? My own choice, on a balanced assessment of the risks, was that we could and should do more now to support a nascent recovery with a further monetary injection. I do not believe the assertions of those who claim that that QE is noticeably less powerful than previously – although I have noted that there are limits to what monetary policy can be expected to achieve on real growth and it is impossible to measure the impact of monetary policy with any degree of precision. As with changing interest rates, the precise effects will always depend on the state of the economy.