François Villeroy de Galhau: The euro - 25th anniversary of the Maastricht Treaty Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Osservatorio Permanente Giovani-Editori, Florence, 7 February 2017. * * * Ladies and gentlemen, I wish to sincerely thank the Osservatorio Permanente Giovani-Editori and its Chairman, Andrea Ceccherini, for inviting me. I am delighted to be with you this afternoon, with the young people of Italy, in a country that I love. A country that is at the heart of Europe and that has often marked its history, as illustrated by your magnificent city of Florence, and the glory of its Quattrocento, cradle of the whole European Renaissance. But a country that currently has doubts about Europe. I stand before you, following in the footsteps of Ignazio Visco, Jean-Claude Trichet, Jens Weidmann and Klaas Knot, as both a central banker and a committed European. And, on this 7th of February, I want to speak to you about the euro: today is the 25th anniversary of the signing of the Maastricht Treaty. The euro has existed now for 18 years and for the past 15 years it has replaced the Italian lira and the French franc in our wallets. I want to start by saying what the single currency has brought, in concrete terms, to the Europeans and then reply to four doubts that we often hear about the euro. Lastly, I want to talk about what remains to be done collectively in the future.
Long taken for granted, this has become the holy grail of banking regulation and supervision. And it has become the ultimate goal of all the relevant reforms that have been undertaken since the crisis. And much has been done. We have revamped the global standards for capital and liquidity – Basel III. Rules for banks are now much stronger than they were before. And the same is true for supervision. Just think of European banking supervision, which was set up in 2014. All this will help to make banks more resilient, so that they can reliably serve the economy. But there is one thing which neither rules nor supervisors can do. They cannot prevent each and every bank from failing. And in my view, we should not even try to. The possibility of failure is inherent to any kind of business, and it is a core element of well-functioning market economies. 1/9  BIS central bankers' speeches  No, it is not the job of supervisors to keep individual banks alive. We, in particular, must not lower our standards to cater for the weakest bank. It would also be wrong to assume that each bank, even the weakest, just needs time to sort itself out. It would be wrong to assume that the local economy just needs to grow for a few more years for the bank to recover. The result would be weak banks that stagger on, zombie-like, barely able to survive in good times.