Christian Noyer: Financial regulation-stability versus uniformity, a focus on non-bank actors Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements and President of the ACPR (Autorité de contrôle prudentiel et de resolution/French Prudential Supervisory Authority), at the ACPRBank of France Conference “Financial regulation-stability versus uniformity, a focus on non banks actors”, Paris, 28 September 2015. *  *  *  Ladies and Gentlemen, It is a great pleasure for me to introduce this Conference on a particularly topical issue: “Financial regulation-stability versus uniformity, a focus on non-banks actors”. The title of the conference invites all the participants to reflect on the puzzle policy makers are facing these days: –  on the one hand preventing regulatory arbitrage and ensuring a consistent approach to financial regulation between sectors  –  and on the other hand taking into account the idiosyncratic business models and risks of each actor or sector of the financial system. To explore further this question, I would like first to thank Professor Jean Tirole, the 2014 Nobel Memorial Prize in Economic Sciences who will deliver the keynote address today. I am also honored to welcome the distinguished speakers, academics, policy makers, industry representatives who agreed to share with us their views on how best to regulate non-banks actors. Other the past few years, the Banque de France has developed a close cooperation with Jean and his colleagues from the Toulouse School of economics.
Next, I shall discuss how uncertainty and the degree of credibility with which monetary policy is associated influence policy formulation. These two factors play an important role in practice. The third issue concerns the exchange rate. For small open economies this issue is one of the most important determinants of inflation at the same time as it is also an important measure of how stable economic policy is seen to be. How changes in the exchange rate ought to be handled when monetary policy decisions are taken has been an important monetary policy issue in Sweden in recent years. Finally I shall discuss the issue of how the monetary policy goal has been defined and should be interpreted. The Inflation/Growth Connection The Riksbank’s chief task is the achievement and preservation of price stability, which should be interpreted as keeping the rate of inflation at a low and stable level. Behind this view of the role of monetary policy lies the understanding that growth and employment cannot in the long run be achieved via an inflationary policy. There are other factors that determine growth: technological development, the way in which the economy functions, human resources development, etc. Attempts to stimulate the economy in the short run by allowing higher inflation tend to rebound in the long run. Swedish experience in the last decade, and also experiences in other countries, demonstrate this. Participants in the economy see through the policy, revise wage demands upwards and raise prices.