François Villeroy de Galhau: Building together a future-proof banking and payment sector in Europe

Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Global Official Institutions Conference, organised by BNP Paribas, Paris, 22 June 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and Gentlemen,

I am pleased to be with you for this Global Official Institutions Conference organised by BNPP, and I extend my warmest thanks to Jean Lemierre, Chairman of BNPP's board of directors, for his invitation to give this speech.

Facing the obvious turbulence and challenges of the last 18 months, we come here from different perspectives. Let me focus nevertheless on some common features: I will take the European view, and not only the French one. And I will focus on two delicate interactions between public authorities and private sector financial institutions:

• the first one is about the recent past: why did the euro area escape the banking turmoil born in the US and in Switzerland, and can we be safe enough? (I)
• the second one is about the next future: why should Central banks stand ready to issue a digital currency? (II)

I. Banking turmoil: three blessings and a funeral

I spoke after SVB's failure of 'Three blessings and a funeral'. Let me start with the funeral, at least the one that we can welcome, but which, unfortunately, is not final. It should be the condemnation and the funeral of mismanagement. Blatant mismanagement of the risks and of the business model in some banks explains first and foremost the recent turmoil. It must be reiterated, SVB's business model was fortunately an outlier, and the rise in interest rates generally benefits European banks, thanks to their diversified deposit base and large loan portfolio. As president of the French prudential authority, I can attest to French banks' robustness: their net banking income increased by 5.3% in 2022, and their revenues remain on a high track in 2023.