François Villeroy de Galhau: Prospects, challenges and promises New Year wishes to the Paris financial centre New Year wishes to the Paris financial centre by Mr François Villeroy de Galhau, Governor of the Bank of France, 12 January 2017. * * * I would like to welcome you all, our partners throughout the year – public officials, financial and economic players, journalists – to this magnificent Golden Gallery for this happy tradition of extending New Year wishes to the Paris financial centre. I would like to start by extending to you, on behalf of the whole of the Banque de France and the ACPR, our warmest wishes for 2017, for you and your loved ones, as well as for all of your staff. To these personal wishes, I would like to add several collective wishes this evening: first for Europe and its economy, then for our country, and finally for the smooth financing of our economy and for financial institutions. 1. For Europe and its economy A year ago, I had noted with you that 2016 had begun as the year of volatility, with the turbulences in the financial markets. In fact, 2016 was rather the year of uncertainty, with the Brexit victory in June, the American election in November and the Italian referendum in December.
In the long run, output is determined by the supply of labour and capital and adaptability, but in the short and medium term monetary policy can also have an impact on the real economy. The economy grows over time. Output moves in waves. Output will in some periods lie below trend growth and in others above trend. The difference between trend output and actual output is called the output gap. Stabilising output growth means that one seeks to maintain actual output near trend. The output gap provides an indication of pressures in the real economy. Developments in the output gap provide a basis for assessing output stability and can thus also shed light on domestic inflationary pressures in the economy. When the economy is booming, the output gap is positive. When the economy is at a low ebb, the output gap is negative. We have had pronounced economic cycles in the Norwegian economy. The downturn at the beginning of the 1990s was followed by an upturn from 1993. This upturn peaked in 1998. There was a shift from a recovery to a period of strong expansion. Growth came to a halt in 2002. An upturn is now in progress. BIS Review 16/2004  1  Other indicators may also shed light on stability in output and employment. The wage gap is an indicator of the social partners’ perception of employment and labour shortages.