François Villeroy de Galhau: The euro as a complementary asset in a more multilateral system

Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the conference "The internationalisation of the euro and the creation of the EU Capital Markets Union", Paris, 16 June 2023. 

Central bank speech  | 
19 June 2023

Ladies and Gentlemen,

It is a great pleasure for me to be with you today for this conference on the internationalisation of the euro and the creation of the EU Capital Markets Union. I would like to warmly thank the Robert Triffin International (RTI) association and the European League for Economic Cooperation, and more particularly Bernard Snoy, for their invitation.

I will begin by discussing the monetary policy decisions taken yesterday by the Governing Council, before getting to the heart of the matter of today's conference. Powerful forces are pushing for greater diversification within the international monetary system. The euro must now play its full international role, in order to assert itself as a complementary anchor towards the "creative frontier" that a truly multilateral international monetary system (IMS) would one day represent.

I Monetary policy

We decided yesterday a 25 basis point increase, in line with the slower pace adopted early May. And our future decisions will be data driven, meeting by meeting. Hence nobody should rush to a premature conclusion about our calendar nor about our terminal rate, and the latest market volatility seems somewhat excessive. Let me stress two elements in this direction:

  • We are data driven, we are not forecasts driven. And recent data show that even if we are obviously still far from the inflation target, our monetary policy is at work, and is working : inflation has peaked in the euro area, core  inflation has declined for the second consecutive month, and there are several other signs that underlying price pressures are softening. According to yesterday's inflation forecast, which is a rather cautious one, inflation should be at 3 % in the euro area by the end of this year, and at 2% by 2025: we are confident that we will deliver on our inflation target in the next two years.