Texte intégral
Mr. Chairman, Ladies and Gentlemen, I am delighted to join you today at the Paris europlace Conference.
Let me start by thanking you warmly for offering me the opportunity to address such a distinguished audience, truly representative of the global marketplace.
Today I want to talk briefly about the conditions for sustained growth and prosperity in europe, also about the contribution of the euro to the global financial markets. I shall try to answer three simple questions:
How will the euro increase the growth potential of the euro area?
What should be the contribution of euro financial markets in this process?
What is the financial strategy of the Paris financial market?
How will the euro increase the growth potential of the euro area?
As market participants, and as managers of financial institutions, many of you have been involved in preparing the introduction of the euro on 1st January 1999. You know how carefully the technical aspects of its introduction were prepared. Let me also stress, especially today when an American and worldwide slowdown is taking place, the fact that euro is backed by sound fundamentals.
These fundamentals are : a strong internal demand, a highly skilled workforce, excellent research and technology, an independent central bank with a clear-cut mandate, budgetary discipline, close coordination of economic policies, and a range of EU-wide structural policies aimed at strengthening and widening the single market.
A sound economic policy framework
In 1992, the Maastricht Treaty established a procedure for avoiding excessive public deficits throughout the euro area. This procedure was further enhanced before the introduction of the euro by the "Stability and Growth Pact". You probably know that the Pact forbids Member States' deficits from exceeding 3% of their GDP. This rule was necessary to avoid conflict between the common monetary policy and national fiscal policies. In addition, Member States adopted, in signing the Stability Pact, the objective of a balanced budget over the medium-term.
Monetary policy is decided by the eurosystem, which is made of the ECB and the central banks of the euro area. It is important to note that members of the Governing Council of the ECB do not represent their country: they are appointed in an individual capacity. The Council conducts monetary policy in accordance with conditions in the euro area as a whole.
This framework has been complemented by a reinforced coordination of economic policies within the euro area. This is the role of the so called eurogroup, made up of the twelve Finance Ministers from the euro area. In the last months, especially when France was presiding it, the eurogroup has enlarged its sphere of action. Structural issues such as ageing problems are increasingly being discussed. In the long run, Economic and Monetary Union will bring a gradual reinforcement of the political links among european countries.
EU-wide structural reforms
The euro not only intensifies competitive pressures, it is also making europe a genuinely single market and it brings a new momentum for structural reform. Policy-makers across europe are now focusing more than ever on overcoming economic rigidities. At the Lisbon summit in April last year, the EU Heads of State and Government established an ambitious agenda of reforms for the next decade.
There are many signs that the Lisbon strategy has put europe on the right track. Labor market reforms have been introduced in a number of countries, for instance in France, Spain and the Netherlands. There is also a widespread implementation of active employment policies. All these factors have played a role in fostering job creation. In line with the objectives set in Lisbon, the EU has created some 2.5 million jobs in the year 2000. Definitely, something did happen on the labor markets in the euro area, and this is sustaining confidence, domestic demand and ultimately, growth.
Another field where Member states are making some progress is fiscal reform. Most euro area countries, France among them, recently adopted comprehensive tax reduction plans which include cuts particularly in social security contributions and personal income taxes. These plans should strengthen the supply side of the economy.
Ultimately, we know that the value of a currency is determined by the stability of the country and by the ability of its firms and citizens to generate wealth. Why is the US dollar today a strong currency? For various reasons, and particularly because US companies and households have demonstrated their ability to create wealth. Nowhere is it more apparent than here in New York, at the heart of the US financial marketplace. The same momentum exists in most of today's europe., even though it is not sufficiently well known. The sound policy framework and the reforms which have been implemented have started to bear fruit. I am convinced that they will contribute to raising the potential growth rate of the euro area.
Robust growth perspectives in the euro area
During the last years, the euro has largely shielded the euro area from the uncertain economic prospects of the world economy. The US slowdown has a negative effect on european exports but GDP growth in the euro-area, although it should be slower than last year, remains robust, between 2.5 and 3%. Sound macroeconomic fundamentals have fostered a favorable investment climate and steady job creation. A virtuous growth circle is rooted in domestic demand and in competitiveness.
In France, strong domestic demand is pulling economic activity, for the fourth year in a row.. GrowthIt should be somewhat under 3% in 2001 after 3.2 % in 2000. Inflation remains low after stripping out the lagged effects of last year's oil shock and the temporary effects of the BSE crisis on food prices. With a year on year increase of 1.3%, France has the lowest inflation rate of the euro area and the highest growth rate of G7 countries.
Non-farm payrolls increased by more than 500,000 in 2000, a rate of increase close to 3.5 % and even higher than in the United States. In March, the unemployment rate was the lowest in 18 years. It does not mean that there is no longer any reform to implement, but such achievements may prove that our policy options were not the wrong ones: incentive for strong demand and flexibility in work-time, cuts in social contributions for low-skilled workers, and innovative "welfare to work" tax schemes with the creation of a "prime pour l'emploi". As a consequence, in France and also in the euro area, wage pressures remain at a reasonable level.
However, euro area policymakers are very well aware of the downside risks posed by the external environment. At our meeting last Saturday in Washington, my G-7 colleagues and I agreed that "we should be vigilant and forward-looking in maintaining and implementing policies that promote strong productivity growth, including sound macroeconomic policy, structural reform, and international economic cooperation". europe's best contribution to this joint effort will be to pursue policies supportive to growth, and to continue with structural reforms in order to sustain consumer and investor confidence.
Further evidence of the far-reaching changes is the growth rate of payrolls and the results achieved throughout the euro area in the fight against unemployment. In France, non-farm payrolls increased by more than 500,000 in 2000, close to 3.5%, higher than in the United States. In march, we reached the lowest rate in unemployment in 18 years at 8.7%. Definitely, something did happen on the labor markets in the euro area, and it is sustaining confidence, domestic demand and ultimately, growth.
Let me conclude on that aspect that the current level of the euro does not provide a fair view of the euro area's economic fundamentals. One should not focus on such or such figure, but on the direction for change. As the eurogroup has repeatedly stated, a strong economy goes along with a strong currency.
The consequences of the changeover to euro notes and coins
In this context, a new and important factor is that, in only nine months, the 1st January 2002, the euro will be the only unit of account in participating countries. Those of you who come to visit us will realize what this major change means. You and every citizen of the world will be able to travel from Finland to Portugal, not only without having to show your passport at any border, since there are no borders anymore, but also without having to visit a single currency exchange office.
Every month, my eurogroup colleagues and I discuss the progress of preparations for the introduction of euro banknotes and coins. It is a tremendous challenge, probably unprecedented in history. In six weeks, we will substitute peacefully 15 billion notes representing 686 billion euros throughout the euro area. In France only, 20,000 tons of coins will be distributed at the beginning of 2002, representing four times the weight of the Eiffel Tower. We are confident that this process will go reasonably smoothly.
What is important is that up to now, the euro has remained an abstract notion for most of the 300 millions european citizens. When this happens, it will become a tangible reality. I firmly believe that the physical introduction of the euro will dramatically increase the perception of an emerging european identity and its attractiveness.
As far as France is concerned, our economy which is in a key position in europe, remains strong. Foreign direct investment in France has soared in 2000, reaching nearly 50 billions euros. Investments into small and medium-sized enterprises have strongly increased, reflecting the attractiveness of the French site and economy. The main figures are good.
The contribution of euro financial markets to growth
The importance of the euro as a global currency mirrors the eminent role of the euro area in global trade. As the largest trade area in the world, euroland accounts for 15% of world exports. Roughly speaking, between 2/3rd and 3/4th of the external trade of the euro area takes place in euros. The trade strength of the area acts as a sort of magnet for countries with the closest trade ties.
In quantitative terms, the euro bond market became a leader in only two years. It now offers the same liquidity as the US market. The perception of the euro market is changing as proven by two significant US developments. Firstly, Freddie Mac has decided to take its investments to the euro market in order to reach a broader range of investors, even if the issuing price is not as good as in the US market. Secondly, the Federal Reserve has announced its decision to diversify its portfolio in europe and to use the entire sovereign debt to manage its reserves.
Unification of euro area stock markets will increase investment opportunities. We believe a single EU securities market must fast become a reality in order to ensure more competitive funding for EU enterprises, increased liquidity, better service at lower cost and improved returns for investors, all of which will result in a stronger EU economy.
A first step to the achievement of a single EU securities market is the recent merger between the Paris, Amsterdam and Brussels exchanges. The new entity, euronext, now has the largest market capitalization in euroland. euronext has several valuable assets: it is the first exchange to offer users a fully integrated european trading, clearing and settlement system. Significant benefits for market users and shareholders arise from cost savings, enhanced liquidity, transparency and price discovery thanks to the creation of a single order book and from a streamlined clearing and settlement process. Market users, shareholders and listed companies will also benefit from this simple and flexible regulatory environment: since the merger was announced, regulators and ministers have been working out the best decentralized approach in order to keep listing requirements local. Here again, we believe that european cooperation is the key to efficiency.
Last July, the european Council instructed a committee of wise men to reflect and make proposals with respect to regulation of the securities market and of financial information. Professionals stress the difficulty of operating in a legal environment affected by inadequately aligned national regulations and numerous interpretations of common rules.
The wise men final report was approved last month by the european Council in Stockholm. The new framework, which provides for a "Securities Committee" and a "Securities Regulators Committee", will speed up adoption of european regulations and coordinated implementation by national authorities. This will enable regulators to cooperate more formally and help standardize practices within the EU.
MY CONCLUDING REMARKS WILL DEAL WITH "What is the financial strategy of the Paris financial market? "
The Paris financial market is a cornerstone of the unified financial markets and has a special role to play to promote a stronger europe. The consolidation process of the european financial services industry continues. Brokerage firms are merging and new products are launched for new media. We need to join forces in order to build up our financial sector and to make French territory still more attractive. The members of the europlace association have just completed an extensive review to determine the measures necessary to promote the Paris market. It is important to continue the financial reforms and I intend to do so with measures targeted at financial regulation, financial instruments and financial structures.
As regard financial regulation, the bill to reform the French financial authorities will be discussed in Parliament this autumn. Under the new law, oversight will be exercised by two bodies: a stock exchange body pooling the three existing structures, and a banking and insurance body. Different from the FSA model, this organization is sufficiently flexible and pragmatic to gear French regulations to the european profile. The new institutional regulations will need to be accompanied by more general regulations, particularly in the area of taxation, in order to attract more financial activities to Paris. In the beginning of this year I asked a member of Parliament to prepare a report for our action and we shall examine this summer its conclusions for the next budget.
As regard financial instruments, various improvements are taking place. The new law on employee savings plans was recently promulgated. Created late last year, France Trésor, the French government debt management agency, is now operational, excellent, and is in a position to pursue an even more active debt management strategy. The new law on economic and financial provisions will modernize the legal framework for certain financial products in order to preserve the competitiveness of the French financial management industry.
As regard financial structures, the government has started and plans to make the most of the leverage at its disposal to promote the emergence of european champions based in France.
Mr. Chairman, Ladies and Gentlemen, preparation of changeover to the euro provided everyone in europe with a strong incentive to reform its monetary and budgetary practices. While the changeover will soon be behind us, while French economic results are generally viewed as the best in europe, we do not want to rest on our laurels. We still have a lot of reforms to implement. The euro area needs to make itself still more attractive. That is the purpose of the decisions and reforms underway in France. These are some of the reasons why you can make sustainable investments with us.
(Source http://www.finances.gouv.fr, le 2 mai 2001)
Let me start by thanking you warmly for offering me the opportunity to address such a distinguished audience, truly representative of the global marketplace.
Today I want to talk briefly about the conditions for sustained growth and prosperity in europe, also about the contribution of the euro to the global financial markets. I shall try to answer three simple questions:
How will the euro increase the growth potential of the euro area?
What should be the contribution of euro financial markets in this process?
What is the financial strategy of the Paris financial market?
How will the euro increase the growth potential of the euro area?
As market participants, and as managers of financial institutions, many of you have been involved in preparing the introduction of the euro on 1st January 1999. You know how carefully the technical aspects of its introduction were prepared. Let me also stress, especially today when an American and worldwide slowdown is taking place, the fact that euro is backed by sound fundamentals.
These fundamentals are : a strong internal demand, a highly skilled workforce, excellent research and technology, an independent central bank with a clear-cut mandate, budgetary discipline, close coordination of economic policies, and a range of EU-wide structural policies aimed at strengthening and widening the single market.
A sound economic policy framework
In 1992, the Maastricht Treaty established a procedure for avoiding excessive public deficits throughout the euro area. This procedure was further enhanced before the introduction of the euro by the "Stability and Growth Pact". You probably know that the Pact forbids Member States' deficits from exceeding 3% of their GDP. This rule was necessary to avoid conflict between the common monetary policy and national fiscal policies. In addition, Member States adopted, in signing the Stability Pact, the objective of a balanced budget over the medium-term.
Monetary policy is decided by the eurosystem, which is made of the ECB and the central banks of the euro area. It is important to note that members of the Governing Council of the ECB do not represent their country: they are appointed in an individual capacity. The Council conducts monetary policy in accordance with conditions in the euro area as a whole.
This framework has been complemented by a reinforced coordination of economic policies within the euro area. This is the role of the so called eurogroup, made up of the twelve Finance Ministers from the euro area. In the last months, especially when France was presiding it, the eurogroup has enlarged its sphere of action. Structural issues such as ageing problems are increasingly being discussed. In the long run, Economic and Monetary Union will bring a gradual reinforcement of the political links among european countries.
EU-wide structural reforms
The euro not only intensifies competitive pressures, it is also making europe a genuinely single market and it brings a new momentum for structural reform. Policy-makers across europe are now focusing more than ever on overcoming economic rigidities. At the Lisbon summit in April last year, the EU Heads of State and Government established an ambitious agenda of reforms for the next decade.
There are many signs that the Lisbon strategy has put europe on the right track. Labor market reforms have been introduced in a number of countries, for instance in France, Spain and the Netherlands. There is also a widespread implementation of active employment policies. All these factors have played a role in fostering job creation. In line with the objectives set in Lisbon, the EU has created some 2.5 million jobs in the year 2000. Definitely, something did happen on the labor markets in the euro area, and this is sustaining confidence, domestic demand and ultimately, growth.
Another field where Member states are making some progress is fiscal reform. Most euro area countries, France among them, recently adopted comprehensive tax reduction plans which include cuts particularly in social security contributions and personal income taxes. These plans should strengthen the supply side of the economy.
Ultimately, we know that the value of a currency is determined by the stability of the country and by the ability of its firms and citizens to generate wealth. Why is the US dollar today a strong currency? For various reasons, and particularly because US companies and households have demonstrated their ability to create wealth. Nowhere is it more apparent than here in New York, at the heart of the US financial marketplace. The same momentum exists in most of today's europe., even though it is not sufficiently well known. The sound policy framework and the reforms which have been implemented have started to bear fruit. I am convinced that they will contribute to raising the potential growth rate of the euro area.
Robust growth perspectives in the euro area
During the last years, the euro has largely shielded the euro area from the uncertain economic prospects of the world economy. The US slowdown has a negative effect on european exports but GDP growth in the euro-area, although it should be slower than last year, remains robust, between 2.5 and 3%. Sound macroeconomic fundamentals have fostered a favorable investment climate and steady job creation. A virtuous growth circle is rooted in domestic demand and in competitiveness.
In France, strong domestic demand is pulling economic activity, for the fourth year in a row.. GrowthIt should be somewhat under 3% in 2001 after 3.2 % in 2000. Inflation remains low after stripping out the lagged effects of last year's oil shock and the temporary effects of the BSE crisis on food prices. With a year on year increase of 1.3%, France has the lowest inflation rate of the euro area and the highest growth rate of G7 countries.
Non-farm payrolls increased by more than 500,000 in 2000, a rate of increase close to 3.5 % and even higher than in the United States. In March, the unemployment rate was the lowest in 18 years. It does not mean that there is no longer any reform to implement, but such achievements may prove that our policy options were not the wrong ones: incentive for strong demand and flexibility in work-time, cuts in social contributions for low-skilled workers, and innovative "welfare to work" tax schemes with the creation of a "prime pour l'emploi". As a consequence, in France and also in the euro area, wage pressures remain at a reasonable level.
However, euro area policymakers are very well aware of the downside risks posed by the external environment. At our meeting last Saturday in Washington, my G-7 colleagues and I agreed that "we should be vigilant and forward-looking in maintaining and implementing policies that promote strong productivity growth, including sound macroeconomic policy, structural reform, and international economic cooperation". europe's best contribution to this joint effort will be to pursue policies supportive to growth, and to continue with structural reforms in order to sustain consumer and investor confidence.
Further evidence of the far-reaching changes is the growth rate of payrolls and the results achieved throughout the euro area in the fight against unemployment. In France, non-farm payrolls increased by more than 500,000 in 2000, close to 3.5%, higher than in the United States. In march, we reached the lowest rate in unemployment in 18 years at 8.7%. Definitely, something did happen on the labor markets in the euro area, and it is sustaining confidence, domestic demand and ultimately, growth.
Let me conclude on that aspect that the current level of the euro does not provide a fair view of the euro area's economic fundamentals. One should not focus on such or such figure, but on the direction for change. As the eurogroup has repeatedly stated, a strong economy goes along with a strong currency.
The consequences of the changeover to euro notes and coins
In this context, a new and important factor is that, in only nine months, the 1st January 2002, the euro will be the only unit of account in participating countries. Those of you who come to visit us will realize what this major change means. You and every citizen of the world will be able to travel from Finland to Portugal, not only without having to show your passport at any border, since there are no borders anymore, but also without having to visit a single currency exchange office.
Every month, my eurogroup colleagues and I discuss the progress of preparations for the introduction of euro banknotes and coins. It is a tremendous challenge, probably unprecedented in history. In six weeks, we will substitute peacefully 15 billion notes representing 686 billion euros throughout the euro area. In France only, 20,000 tons of coins will be distributed at the beginning of 2002, representing four times the weight of the Eiffel Tower. We are confident that this process will go reasonably smoothly.
What is important is that up to now, the euro has remained an abstract notion for most of the 300 millions european citizens. When this happens, it will become a tangible reality. I firmly believe that the physical introduction of the euro will dramatically increase the perception of an emerging european identity and its attractiveness.
As far as France is concerned, our economy which is in a key position in europe, remains strong. Foreign direct investment in France has soared in 2000, reaching nearly 50 billions euros. Investments into small and medium-sized enterprises have strongly increased, reflecting the attractiveness of the French site and economy. The main figures are good.
The contribution of euro financial markets to growth
The importance of the euro as a global currency mirrors the eminent role of the euro area in global trade. As the largest trade area in the world, euroland accounts for 15% of world exports. Roughly speaking, between 2/3rd and 3/4th of the external trade of the euro area takes place in euros. The trade strength of the area acts as a sort of magnet for countries with the closest trade ties.
In quantitative terms, the euro bond market became a leader in only two years. It now offers the same liquidity as the US market. The perception of the euro market is changing as proven by two significant US developments. Firstly, Freddie Mac has decided to take its investments to the euro market in order to reach a broader range of investors, even if the issuing price is not as good as in the US market. Secondly, the Federal Reserve has announced its decision to diversify its portfolio in europe and to use the entire sovereign debt to manage its reserves.
Unification of euro area stock markets will increase investment opportunities. We believe a single EU securities market must fast become a reality in order to ensure more competitive funding for EU enterprises, increased liquidity, better service at lower cost and improved returns for investors, all of which will result in a stronger EU economy.
A first step to the achievement of a single EU securities market is the recent merger between the Paris, Amsterdam and Brussels exchanges. The new entity, euronext, now has the largest market capitalization in euroland. euronext has several valuable assets: it is the first exchange to offer users a fully integrated european trading, clearing and settlement system. Significant benefits for market users and shareholders arise from cost savings, enhanced liquidity, transparency and price discovery thanks to the creation of a single order book and from a streamlined clearing and settlement process. Market users, shareholders and listed companies will also benefit from this simple and flexible regulatory environment: since the merger was announced, regulators and ministers have been working out the best decentralized approach in order to keep listing requirements local. Here again, we believe that european cooperation is the key to efficiency.
Last July, the european Council instructed a committee of wise men to reflect and make proposals with respect to regulation of the securities market and of financial information. Professionals stress the difficulty of operating in a legal environment affected by inadequately aligned national regulations and numerous interpretations of common rules.
The wise men final report was approved last month by the european Council in Stockholm. The new framework, which provides for a "Securities Committee" and a "Securities Regulators Committee", will speed up adoption of european regulations and coordinated implementation by national authorities. This will enable regulators to cooperate more formally and help standardize practices within the EU.
MY CONCLUDING REMARKS WILL DEAL WITH "What is the financial strategy of the Paris financial market? "
The Paris financial market is a cornerstone of the unified financial markets and has a special role to play to promote a stronger europe. The consolidation process of the european financial services industry continues. Brokerage firms are merging and new products are launched for new media. We need to join forces in order to build up our financial sector and to make French territory still more attractive. The members of the europlace association have just completed an extensive review to determine the measures necessary to promote the Paris market. It is important to continue the financial reforms and I intend to do so with measures targeted at financial regulation, financial instruments and financial structures.
As regard financial regulation, the bill to reform the French financial authorities will be discussed in Parliament this autumn. Under the new law, oversight will be exercised by two bodies: a stock exchange body pooling the three existing structures, and a banking and insurance body. Different from the FSA model, this organization is sufficiently flexible and pragmatic to gear French regulations to the european profile. The new institutional regulations will need to be accompanied by more general regulations, particularly in the area of taxation, in order to attract more financial activities to Paris. In the beginning of this year I asked a member of Parliament to prepare a report for our action and we shall examine this summer its conclusions for the next budget.
As regard financial instruments, various improvements are taking place. The new law on employee savings plans was recently promulgated. Created late last year, France Trésor, the French government debt management agency, is now operational, excellent, and is in a position to pursue an even more active debt management strategy. The new law on economic and financial provisions will modernize the legal framework for certain financial products in order to preserve the competitiveness of the French financial management industry.
As regard financial structures, the government has started and plans to make the most of the leverage at its disposal to promote the emergence of european champions based in France.
Mr. Chairman, Ladies and Gentlemen, preparation of changeover to the euro provided everyone in europe with a strong incentive to reform its monetary and budgetary practices. While the changeover will soon be behind us, while French economic results are generally viewed as the best in europe, we do not want to rest on our laurels. We still have a lot of reforms to implement. The euro area needs to make itself still more attractive. That is the purpose of the decisions and reforms underway in France. These are some of the reasons why you can make sustainable investments with us.
(Source http://www.finances.gouv.fr, le 2 mai 2001)