Clearly we need to learn what we can from recent history and take steps now to make domestic and international financial systems more resilient. Crises are opportunities for implementing change, and in the US and internationally, significant reforms traditionally have been born of crisis. To effect meaningful and appropriate reform, however, we must fully understand cause and effect and the broader trends of international financial intermediation. Today, I would like to share with you my perspective on these issues based on US and international experience, with special emphasis on the need for additional preventive measures. BIS Review 64/1998  -2-  Importance of sound banking systems Over the long run, a nation must be able to mobilize domestic savings and other sources of funds needed to finance investment and other productive expenditures. This requires the development of an effective banking system that transfers surplus funds of households and businesses to borrowers and investors. Fair and impartial allocation of credit accommodates the economic development that results in improved national living standards. Notwithstanding broad changes in the intermediation process which have reduced the role of banks in favor of the capital markets, banks retain a critical role in direct intermediation and as managers of financial risk. Sound financial institutions, and banks particularly, remain integral to a sound economy. Effective financial intermediation is particularly important in the context of most emerging market countries given the relative scarcity of savings, a relatively underbanked population, and large-scale investment needs.
François Villeroy de Galhau: Present challenges for France’s central bank Hearing of Mr François Villeroy de Galhau, Governor of the Bank of France, by the Senate Finance Committee, Paris, 30 March 2016. *  *  *  Madam President, General Rapporteur, Senators, Thank you for receiving me this morning, just a few months after your vote of confidence. I attach great importance to these regular exchanges in order to inform you of matters essential to the Banque de France. In 2016, the world in general, and Europe in particular, are experiencing a period of uncertainty: uncertainties relating to our security, with the threat of terrorist attacks still real; political uncertainties, with the risk of “Brexit” and the refugee crisis; as well as economic uncertainties, with lower economic growth in emerging economies, including China, and excess market volatility in January and February. Faced with this turmoil, the Eurosystem, of which the Banque de France is a member, is acting decisively. Its monetary policy is supporting the economy and creating a favourable environment for taking all the other actions necessary to return to strong, sustainable and job-creating growth: France, and Europe, must seize this opportunity to regain confidence. 1. Monetary policy, first of all, is doing its fair share of the work. The Eurosystem is determined to fight the low inflation that we are facing today and thus underpin economic activity. This is our mandate and we are striving vigorously to achieve it.