Presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR) Press conference, Friday 28 May 2021  Speech by François Villeroy de Galhau, Governor of the Banque de France Chairman of the ACPR  Ladies and Gentlemen, It gives me great pleasure to be with you again for the presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority), in the company of the new Vice-Chairman, Jean-Paul Faugère, Dominique Laboureix, Secretary General of the ACPR, and Alain Ménéménis, President of the Sanctions Committee. I would first like to pay tribute to the staff at the ACPR – more than 1,050 men and women whose professionalism is exemplary and recognised – who have worked especially hard, both on-site and remotely, to monitor closely the effects of the economic crisis on financial stability. Exactly a year ago, when we were just at the start of the Covid crisis, I pointed out to you, in this exact same setting, how vigilant we were being and how confident I was, both in the competence of our supervisor and in the resilience of the financial system. Looking back, we haven’t done too badly at all: at this stage, the financial risks are, on the whole, under control, thanks to resilient financial institutions with solid fundamentals (I).
For my part I also considered it important to focus the difficult forecasting work on the time perspective that was deemed to be the most essential for monetary policy and not become too involved in discussions about a more uncertain future. This argument was strengthened in my opinion when the Riksbank’s decision-making process became a collective undertaking. With a less explicit rule and an entirely flexible time horizon our discussions would have risked focusing – more than would have been desirable – on the choice of time perspective, at the cost of a discussion about what we actually know about the present and what we believe about developments over the coming two years. Consideration of real developments Allow me also to say a few words about the background to the clarification of the principles for monetary policy that the Riksbank decided on at the start of 1999. When the inflation target was established in 1993 we understood even then that it couldn’t be applied mechanically. That was intimated, among other things, in a statement that the target was not to begin to apply fully until 1995, in order thereby to cushion the effects of the inflationary impulses that were predicted during 1993 and 1994 following the krona’s fall and the change in indirect taxes. There were also several occasions during the latter half of the 1990s when policy was not conducted slavishly on the basis of CPI forecasts. That was because it was obvious that it could result in absurd consequences.