Benoît Cœuré: Interview with France Info TV Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, and France Info TV, conducted by Mr Jean-Paul Chapel on 9 November 2017. * * *  Global indebtedness is at record levels. Government debt in the rich countries stands at over 100% of GDP. Isn’t that sowing the seeds for the next global crisis? It’s a matter that calls for attention, but I don’t think it will be the cause of the next financial crisis. What will cause it then? I don’t know. But at the ECB we are more concerned about the rapid rise in private debt. Corporate debt? Yes, corporate debt, and shadow banking – those loans that are not made by banks. Dark banks... Shadow banks. They are insufficiently regulated. Also, there’s a widespread temptation to relax banking regulations, at a time when, as you say, interest rates are very low. All that is a source of risk. Government debt is a concern, but it doesn’t threaten to trigger a financial crisis. When the next crisis hits Europe we want to be sure that Member States, governments, have budgetary firepower. Today, that power is very limited or even non-existent. That’s why countries have to deleverage. But in the meantime, you, the central banks, the European Central Bank and other banks, with low interest rates, ample liquidity, you are inflating these bubbles… It’s true that the low rates can create financial stability risks; we’re aware of that.
Nevertheless, it is envisaged that the DFIs are expected to evolve from being the direct financiers to function as a strategic conduit to facilitate financing by the banking system, especially through the provision of credit enhancement. In addition, the DFIs would also increasingly become specialised institutions to render advisory and business support services, in order to increase their effectiveness in meeting the financing and developmental needs. At the same time, the need for DFIs to remain financially sustainable while performing their mandated roles cannot be over-emphasised. This would require continuous capacity and capability enhancement of the DFIs, especially the strengthening of human capital skills and institutional efficiency, together with the adoption of good corporate governance and best practices by the DFIs. In addition, to ensure that available resources are channeled adequately and appropriately to support the targeted sectors, DFIs would need to strategically reduce the channeling of funds to the sectors and businesses that have matured and, on their own, would be able to obtain financial resources from the banking institutions or the capital market. In conclusion, I must say that the theme for today's forum on "Revving up the SMEs as the engine of growth" is both timely and appropriate given the importance and potential economic contributions of SMEs, particularly in the developing countries. Therefore, it is important that the SME sector continues to receive adequate and appropriate financial and ancillary support to ensure their sustainable development towards meeting a nation's development objectives.