There are also examples of situations where these objectives must be weighed against one another. In recent years, inflation has been low and stable in many countries while asset prices have risen sharply. There may be several reasons for this. First, a credible monetary policy will result in expectations of low inflation. Long-term implicit and explicit price and wage contracts based on low inflation in the period ahead may thus become more common. This would mean that it could take longer for increased demand to translate into higher inflation. Asset prices will not necessarily be constrained by expectations and may on the contrary react quickly to changes in the activity level. Second, periods of higher productivity growth may lay the basis for high corporate earnings, heightened optimism and reduced risk awareness. Productivity growth may also result in low inflation. Banks usually have low losses and solid profits and can increase lending without eroding their capital adequacy. Debt-financed investments may lead to a faster rise in house and property prices. Increased globalisation and changes in trading patterns may have similar effects. There seems to be broad agreement that extreme events that can threaten financial stability should be met with a resolute monetary policy response. For example, a number of countries initiated measures to ensure liquidity in the financial system after the terrorist attacks on 11 September 2001. This reduced the risk in the financial systems. There is less agreement, however, about how central banks should respond to financial imbalances that accumulate gradually.
I also call on banks to better monitor their pricing practices: margins must be sufficient to cover the costs and risks associated with housing loans. These points will be particularly closely monitored by the ACPR in 2020, and they are – I stress – of common interest to both you and us – in terms of financial stability. Lastly, to meet the challenge of profitability, French banks and insurers must be able to – at last! – operate in a genuine single financial market conducive to cross-border consolidation. And yet, the Banking Union is still half-finished: progress on resolution – second pillar – is at least as important as that on the deposit guarantee scheme – third pillar. Moreover, in the run-up to the arduous discussions on the future relationship with the United Kingdom, Europe must – more than ever before – assert its financial sovereignty. This requires the Capital Markets Union. I 2/3  BIS central bankers' speeches  would like to express my support for the priorities put forward in the “Next CMU” report and for the High-Level Forum (HLF) launched by the new Commission. If 2020 proves to be not only the year of Brexit, but also the year of a Savings and Sustainable Investment Union, Europe will have turned the problem into an opportunity.