François Villeroy de Galhau: Current challenges of monetary policy

Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Conference of the Chair Bank of France/Paris School of Economics, at the Paris School of Economics, Paris, 24 September 2019.

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

Central bank speech  | 
24 September 2019

Ladies and Gentlemen,

It is a particular pleasure to welcome you on the occasion of the 10th anniversary of the Chair Banque de France/PSE. All anniversaries are worthy of celebration, but the continued partnership of Banque de France with the Paris School of Economics is a particular reason for cheer. Over the past ten years, it has been a testimony of how academic research and economic policy making can reinforce each other.

In the past ten years, thanks to their interaction, much has been done to make our financial environment more capable of reining in financial excesses. Thanks to both, we have introduced many new unconventional tools to implement monetary policy. But these changes have also brought new questions and new uncertainties, on which more academic research is needed. Hence, I would like to elaborate on two present challenges: the conduct of monetary policy in our current economic environment, and the interaction between monetary policy and financial stability.

1. Monetary Policy in the Face of New Challenges

1.1 A New Environment Calling for New Responses

These new uncertainties arise at a time when the global economic environment has itself become increasingly uncertain. In the short term, many of the uncertainties obstructing the economic outlook - and especially the manufacturing sector - are man-made - and even one-man made.