Christian Noyer: A founder’s perspective on the euro as a global currency Speech by Mr Christian Noyer, Governor of the Bank of France, at the joint conference “The euro at ten: the next global currency?”, sponsored by the Peterson Institute for International Economics and Bruegel, Peterson Institute for International Economics, Washington DC, 10 October 2008. *  *  *  Good afternoon. It is a great pleasure to be here today with so many friends and colleagues to celebrate ten years of the Euro as a global currency. I must confess this is not exactly my idea of a quiet and peaceful anniversary. When I was privileged to be designated as ECB's first Vice President, I would never have imagined that I would be sitting now, as a member of the Governing Council, dealing with the worst financial crisis in the last eighty years. Actually, one of the main gratification of the job during the crisis has been the quality of our collective interaction and deliberation in the Governing Council, based on our willingness, in very challenging circumstances, to share judgments and exchange views in a spirit of friendship and mutual respect. I am very proud to be part of such a group. Together, we have been able to make quick decisions and adjust flexibly to fast changing environment, without ever giving up on our mandate and our mission. Obviously, the Euro area, like the rest of the industrialised world, is going through a very rough patch.
Given the limited scope for cutting deposit rates, low interest rates tend to depress net interest income. Thus, it will become increasingly difficult to maintain the cross-product subsidy whereby banks often exploit the loan-deposit spread to cover the cost of providing services to customers. Indeed it seems reasonable to expect that the zero fees policy will gradually fade into the background and that competition for deposits will shift in part to the business of providing transactional services. In any event, Spanish banks must adapt their business strategies to the new environment and must, in particular, take measures to continue to improve their operational efficiency. It is true to say that operational efficiency is, in general, already high in the Spanish industry in comparison with the rest of Europe, as Spanish banks on average have lower cost indicators than their euro area peers, but there are considerable differences from one institution to another and there is, therefore, room for improvement. It seems particularly appropriate to reflect on the need to adjust the commercial model of Spanish banks which is characterised, despite the industry consolidation, by a number of offices per capita which is much higher than the European average. In my view, both 6  BIS central bankers’ speeches  technological progress, which allows banks to increasingly interact with customers beyond physical points of sale, and the need to restore bank profitability on a sustainable basis, are sufficient arguments to support this reflection.