François Villeroy de Galhau: Numerous challenges for the international monetary system Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the High Level Seminar on International Financial Architecture, Paris, 31 March 2016. *  *  *  Ladies and gentlemen, France, and the Banque de France in particular, has a long tradition of spurring high level reflections on the international financial architecture, such that we very much welcome the creation of the IFA WG by the Chinese presidency. This new working group echoes the IMS (International monetary System) Working Group that was launched under the French presidency of the G20 in 2011. At the time, the debates on the IMS were already very intense, as witnessed for instance by the profusion of proposals to amend the IMS, such as the Palais Royal Initiative, led by one of my predecessors as Governor of the Banque de France, Michel Camdessus. Before that, we all remember the work done by another former Governor of the Banque de France, Jacques de Larosière, who contributed a very influential report in 2009 on the European Union, which also had an international dimension. The Eurosystem, on its part, is committed to financial stability. We decided on March 10th a comprehensive and powerful package, aiming to provide favorable financial conditions for the economy. We will look closely at these financial conditions in the future and if needed, we could act further. The international monetary system is still facing numerous challenges.
Savings instruments that attract customers are even being provided, at least in Sweden, by food chains and petrol companies. In the case of loans, a growing proportion of credits is being arranged in the securities markets. Then there is more uncertainty about the social security system’s future ability to generate adequate pensions. The demographic trends are also entailing changes in saving behaviour; a growing proportion of people in the industrialised world are approaching retirement and are more prone to save than to borrow. BIS Review 81/1998  -2Cross-border investment is rising. People in Sweden, for example, are placing their longterm savings to a growing extent in assets issued abroad. At the same time, non-residents are increasing their holdings of Swedish financial assets. Furthermore, technological advances are making it possible to supply traditional banking services without the aid of a large branch network. This in turn makes new banking establishments less costly than before and a bank with just a few branches or a business concept based on telephony or the Internet can gain a competitive advantage in certain segments of the market. Products are also becoming more sophisticated and their construction and production are increasingly dependent on specialist knowhow that may become available outside the banks. The speed of these processes varies from country to country. The structure of bank earnings is already changing, with a growing share from a range of commissions compared with the traditional income from net interest.