OMFIF Achievement Award for François Villeroy de Galhau and fireside chat with Joachim Nagel

occasion, also in the week when our new prime minister has announced that Britain is now exploring all options, possibly at one stage in the future under certain conditions which remain totally nameless, that Britain might think about rejoining the European Union. It's a particularly good occasion to have distinguished guests, not only from France and Germany but also from Portugal and Italy, with us here today to talk about Europe. And we're doing it in a ceremony which is going to be presided over by Lord Norman Lamont, who is the chairman of the advisory council, and he's been associated with us right from the very beginning, the very first meeting that we had at the Bundesbank in March 2010, where you of course were there as well, Joachim Nagel, and also Vítor Constâncio. Norman, although you might have forgotten it, you were there as well in March 2010. And so it's a great pleasure to introduce you as the chairman of the council. You took over at the beginning of last year, shortly before me. De Saisset, who had been our chairman for 16 years, unfortunately died, and we all think very highly of his memory, but we also think very highly of you, Norman, for taking on the thankless task of being the chairman of the advisory council. So over to you to preside over the ceremony, please.

Well, David, thank you very much. Ladies and gentlemen, welcome. We're here today to honor a very distinguished public servant, François Villeroy de Galhau, both governor of Banque de France and also chairman of the BIS board of directors. Mr. Villeroy de Galhau comes from a very distinguished French industrial family in Lorraine, and he himself was born in Strasbourg and is a fluent German speaker, something that was extremely important in his dealings with Germany later, which were a very distinguished feature of the board of the ECB. He started, as so many distinguished French civil servants do, as an inspecteur des finances, had various positions in the Trésor, and then between 1990 and 93 he was the political advisor to the then finance minister of France, Pierre Bérégovoy, later prime minister of France. As it so happens, Pierre Bérégovoy was my opposite number when I was chancellor, and I think Mr. Villeroy de Galhau probably listened to quite a few telephone conversations I had in 1992, and I think was probably present in some of our meetings in Brussels as well. We didn't really get introduced, but we were introduced today. Anyway, it was a pleasure to meet you after all these years. If I may say so, just as an aside, I think Pierre Bérégovoy, whose life ended tragically, was treated disgracefully by President Mitterrand, which led to the very sad end of his life. But he was a great public servant, and you did the right thing supporting him and supporting him so well. After that, Mr. Villeroy de Galhau became chef de cabinet of another finance minister. But then he had a career in the private sector where he worked for a subsidiary, a credit organization, a subsidiary of BNP Paribas, and he did that for 12 years. And it was then in 2015 that President Hollande nominated him to be the governor of the Bank of France. And astonishingly, I read that the fact that he'd been in the banking sector for 12 years led to a lot of people protesting that it was unsuitable that he should be appointed governor of the Bank of France. You'd have thought the opposite absolutely applied, and it was a very sensible thing to do. So he was governor of the bank and on the board of the ECB, part of the time under Draghi, part of the time under Lagarde. So while he was on the Banque de France, he faced numerous crises and problems. When he first became a governor, they were still dealing with the overhang of the Greek crisis. But then came the COVID crisis, where he stressed the role of a bank as the shock absorber. And he quite rightly later said people underestimated the inflationary impact that COVID had. But he himself had also to preside over the normalization of monetary policy. And I read that he returned to the French government 20 billion euros from the asset purchase scheme. He's always been a strong supporter of banking union, supervision union, and I read the other day the speech he made not so long ago, because he was ex officio the supervisor of the financial sector as well, and he made a passionate speech calling for simplification of the regulatory system and the regulation of banks. So that is something I'm sure is very dear to all the people here today. Anyway, it's my privilege to introduce him to you, to thank him for his distinguished service. He is mentioned from time to time as a possible successor to Lagarde in the European Central Bank. He's denied that that is a possibility because he wants to devote himself to charitable activities. That would be a real prize, but I'm afraid in the absence of that prize, all he's going to get is a rather modest German-style tankard that we have in a parcel here. It's my pleasure to thank you, sir, for all you've done and to give you this... where is it, David?

Quite a difficult thing to open here, so we need a little bit of help in doing this. And let's have the pair with a camera here because this will be a golden moment. But there we are. You have to open it, I'm afraid. That's why. I need some help. That's right. It's like Christmas all over again. But it's a double gift. No. Could have come from... You see, it's double wrapped. It's the most difficult task in my career to open. Maybe we trained you for this. Now part of the toolkit of central bankers these days is a pen light to open the wrapping. Oh, I see what it is. It is clearly a very precious gift that you really have to wrap up in a great many ways. And of course, if you come from a distinguished industrial family that's dealing with sanitary wear, this is something that you have in a public house. Let me help you open up the other one. But I guess the other one is the same. Yeah, it's not exactly the same. And it has an engraving on it as well. So, while you're looking at all that, I'll open this for you and see if I can do it. But you have to read, you have to read the inscription in German. Of course, you will help me. Yes. Come with me. Yeah. And this one here. Translation. Well, it's... there are many German speakers. Which arise glad with morning light and quaff your cup with spirits bright and... but you have to read the other one. No, you have to read the other one. Your moment has not ended. Your moment of glory has not ended. This one says 'Communauté', which means gladness and laughter forever sought after. And it's also a translation in French as well, just to show how, just to show how international we are. Can I really thank you for the award?

Chancellor, Lord Lamont, for your very kind words. And I remember Pierre Bérégovoy, whom you mentioned. You also mentioned that I come from an industrial family in Lorraine. You know perhaps this firm called, as the Germans say, Villeroy. Villeroy is my name, and this firm used to produce one century ago such objects. So I hope they come directly from Villeroy. And that said, I am especially sensitive to this award because, you know, David, how it is dear to my heart. I participated at I don't know how many events, be it in London, in Paris, or online after COVID, and you have been a very active, how could we say, Joachim, a very active stimulator on our monetary discussion with sometimes your doubts on Europe and on the euro. I think that so far we won the battle, but well, I think Willy Brandt once said, I believe in reason and therefore I believe in doubt. So I take after Willy Brandt. But you're going to give a little lecture in a moment. Before that, I'd like to ask Joachim to come up and say a few words. But maybe you could each hold those beer glasses and we could have a picture of you both holding those. And if I can add something.

Yeah, Mr. Chancellor, you mentioned Christine Lagarde's succession. It's not up to us. Definitely I am not a candidate. There are excellent possible candidates in this room, but I won't quote any name.

Look, if you hold them up like the Julep Trophy, because these are genuine cups, but you've forgot the most important thing. Where's the beer? Yeah. Liquidity. Good. So, the floor is yours. You're here, and we'll sit down while you say a few words, and then you'll introduce François for his lecture. So I'll sit down for the time.

Just before that happens, there's a little award for you as well. Joachim, to say thank you. This is much smaller and it's easier to open. It's easier to open. So, we give the floor to you.

So, dear David Lieber, Mr. Chancellor, dear friends, thank you for your very kind words, which I don't fully deserve, but you are a real friend. Can I only say to our personal relationship and friendship that it's probably a good example of what European dialogue can be, because it's not a secret: we did not always agree on monetary policy, and we had serious discussions, but it was in trust and it was in truth, and I think this is a way to proceed in the French-German relationship and more broadly in the European dialogue. It's my privilege to be here this morning in this vibrant city of London.

And let me here in the UK speak about Europe with a paradox, since the United Kingdom left the EU. And I will not comment on the Prime Minister's recent words. Is it a definitive departure or not? This will be your decision. But since your country left the EU, it's obviously still in Europe, but more than that, it is more than ever in Europe.

We face common challenges, and more common than 10 years ago. It's true economically: low growth, higher inflation due to the war conflict, public finances, as well as geopolitical challenges with common threats coming from the east — the Russian invasion in Ukraine — and now, sorry to have to say it, also coming from the west and the present US administration. Hence the question of European autonomy or sovereignty — call it as you want — is at the top of the agenda.

35 years ago in Maastricht, I was there, we decided Europe's monetary sovereignty. Chancellor Lamont can witness it was not an easy way, and there is a tendency today to consider that the euro was the easy part. It was not, but it's a huge success, supported by about 80% of euro area citizens. And by the way, may I stress it, all major French political parties at present.

At present, our new frontier, if I may use this expression, is to build beyond monetary sovereignty Europe's economic and financial sovereignty. And I will address briefly in the first point what it does precisely imply and what is the road ahead, and then I will come back to monetary sovereignty: how does it have to adapt in an era of such geopolitical and technological changes?

Let me start with the building of this economic and financial sovereignty. We know the diagnosis over the last 25 years. It is in the Draghi and Letta reports. GDP per capita has increased by a cumulative 31% in the euro area, which is not that small, but it's much lower than the 47% in the US, and the main cause is our structural innovation gap. Yet let us precise a bit the diagnosis: Europe does not lack savings. The euro area household savings ratio stands at more than 15% of gross disposable income against 11% in the US, and you can see it in the left panel.

Europe lacks equity capital, which is essential to finance breakthrough innovation and risk-taking, and you see it in the right panel: equity financing of non-financial corporations amounts to only 85% of GDP in the euro area compared with 220% in the US.

This diagnosis is well known to European companies and investors. Asked about the main obstacle, they identify market fragmentation — 32% of respondents. This is the annual European Investment Fund equity survey — and access to capital, 21%, as a key obstacle to scaling up EU firms. Only 3%, as you can see, point to a lack of talent. Furthermore, and let us precise a bit the diagnosis about the other side of the coin, which is investment.

While total investment as a share of GDP is almost the same as in the US, productive investment — this is the middle panel, without construction — is much lower: 10.5% of GDP compared with more than 14% in the US, and still more if we look on the right in innovative investment.

Let me then — this is about the diagnosis — about the therapy. Let me sum up the accumulated 548 pages of the Draghi and Letta reports, and to be honest, I don't know even in this distinguished audience who has completely read perhaps all these 548 pages, but I tend to sum them up with three imperatives. Three I's we all agree upon, and this is my next slide. First, integrate more the single market, notably with the creation of an optional 28 regime by 2028. Second, invest better. This is the savings and investment union. And third, innovate faster. And for that, dare and simplify.

If I had to express it another way, we could use a physical or a physiological image, which you can see on the slide. This is to combine size integration multiplied by financial muscle — saving investment union — multiplied by speed simplification. That said, as Giscard d'Estaing famously said almost 40 years ago, one does not fall in love with a single market. Nor, let us be honest, with a savings and investment union.

And let me here come back to the euro and the lessons of its success. You need two components. You need tangible deliverables, and you need three changes in method. Let me elaborate a bit on the parallel with the euro. Tangible deliverables, and this is the lower part of my slide. The euro succeeded because it was visible for all citizens: the euro in the pocket, and tomorrow the digital euro. I will come back to it. At present, I think that there are at least three obvious tangible expectations from our fellow citizens to address three European gaps. Everybody is worried about...

First, AI and digital. I usually say it this way, and sorry to be very short. If my compatriot Robert Schuman, from the eastern border of France where I was grown — you mentioned it — was back here in London and had to issue a call, it wouldn't be about coal and steel. I am sure he would propose a European community of artificial intelligence, and to put our resources together, to adapt our law, and to have — I will come back to it — a dedicated institution.

Second, clean energy or green energy — call it how you want. But it's an obvious answer for all our countries, including this one, facing the geopolitical threats, the rise of energy prices, and the competitiveness issue. We have this debate: should it be nuclear or renewables? Let us leave this debate to national choices. I am lucky enough to belong to a country who made the nuclear choice. Sorry, Joachim, for this slight provocation, but I perfectly accept the Germans have another choice, but they shouldn't impose it to the rest. I think we are making progress on that. The common word is clean energy. This is part of European geopolitical and economic sovereignty.

And third, defense. I'm less qualified on that, but obviously we have a need for an increase of European defense. I think these three tangibles are expected, and the savings and investment union is only a financial way, an instrument to deliver on these three objectives. I also spoke of three changes in method. There are three requisites to speed up beyond Brussels' usual bureaucratic processes, which had their merits, but they are not up to this fast-changing world. And here you will see I don't propose a revolution. I simply propose to also take the lessons from the success of the euro. There were three elements innovative in the method. First, flexible geometry.

It has not been stressed, but it's obvious. Everybody has in mind the failure or very limited success of so-called enhanced cooperation. But the euro itself started at 11, and we are now 21. The important thing is to keep the door open for everyone. But if we always expect to be 21 or 27 before starting, we will never start.

Second, a dedicated and powerful institution: the ECB in our case, which started for the 11, which was open from the start. If I take the three examples I just gave about artificial intelligence, I refer to proposals by Jean Tirole and other economists. We should probably take the US example and the very successful ARPA, or if you take defense, DARPA, to be able to finance, on an independent and technological assessment, a few projects which are really disruptive, and not to distribute subsidies across the board. It's inefficient.

Second, about energy, there was a proposal by Henri Collet. I think it's interesting to give to the EIB, the European Investment Bank, this role of being a climate bank. And third, about defense, I draw your attention to a very interesting paper by three economists: Hélène Rey in France — but Hélène Rey was more or less in London till some weeks ago, she's now in Basel — Moritz Schularik in Germany, and Philipp Ildefons Brandt, whom you know, proposing to have common defense investment not for the existing capacities — and we know how it's difficult for planes or for tanks or etc. — but for all the new challenges we...

be it drones, be it satellites, be it intelligence where we have no capacity, it's a bit easier to build them together and fund them together. Third element, a calendar. This could seem the simplest element. I used to quote the so-called Walt Disney principle. I'm not completely sure of the quotation, but Walt Disney has probably said that, I think it's true. Do you know the difference between a dream and a project? It's a calendar. And I think this is very wise. Forget about Walt. If you are not sure, think of Jacques Delors, because he applied exactly the same principle. The single market succeeded because there was a fixed calendar from the start, 1st of January '93, and everybody believed in it and aligned with political, administrative work and, still more important, business plans.

The euro succeeded because there was a fixed calendar, 1st of January '99. This comprehensive agenda which I mentioned, which is in the report, will succeed if we associate it to a calendar. I would propose to take the 1st of January '29. It's exactly 30 years after the single currency and it's still, if I may have a smile, during the Trump years, which are probably the most stimulating engine we have.

Let me come back, as I said, to monetary sovereignty and some new challenges. Europe has its currency, fortunately. So imagine one minute the intra-European turmoil in a pre-euro situation in the presence of the external challenges and uncertainty we have. We have one money, but money changes, and let me elaborate a bit about that. I think, Joachim, you will elaborate a bit more during the rest of the day.

What is changing? First, the US unpredictability and fiscal profligacy gradually erodes the dominance of the US dollar. It's a very gradual erosion. The US dollar remains and will remain at the center of the international monetary system. But as you can see, we have already a significant rise of so-called non-traditional reserve currencies, including, let us say it bluntly, the Chinese renminbi.

Second, and still more, and I will insist on technological change. It's not only change, it's a disruption in the nature of money. So the media's buzz is about so-called cryptocurrencies. These words appeared for me and probably for most of you in this audience as an oxymoron and an irrelevant oxymoron. But there is definitely a highly promising innovation in my view with the tokenization of payments. This word tokenization is less mediatic but more relevant, be it in the form of stablecoins or tokenized deposits. The jury is still out.

You know what it is about? Thanks to blockchain technology and smart contracts, tokenization combines two legs, so to say, a payment of cash with the safe exchange of information and legal rights. I believe personally it has a huge potential to improve complex payments such as cross-border ones, which at present are too slow and too expensive, or financial transactions.

Yet tokenization also carries potential contradictions and some threats. And let me start with a red triangle. I will have a more positive and green one in one minute. Three threats briefly summed up: privatization and/or the increased Americanization of money, as more than 99% of global stablecoins at present are issued in dollars by private players. Second, the fragmentation of payments. And third, greater financial risks.

The right answer is obviously not to stop or prohibit innovation, and the issue deserves a full speech of its own. Joachim, you will probably elaborate. Let me only sum up the ECB strategy, which is an appropriate combination of several components, and this is my green slide if I put the two of them together more positively. First, to lead by sovereign innovation in the form of a central bank digital currency, a CBDC. One week ago, we could see the first direct access worldwide of tokenized transactions to central bank money with the Pontes project, and we will see the retail digital euro in the next two years.

And in parallel, promote private innovation. And I don't oppose sovereign public innovation and private innovation. You can read an excellent op-ed of my former colleague Piero Cipollone in The Economist this week. Promote financial private innovation from European banks and in euros. They still lag behind there, let us acknowledge it. But several projects are flourishing and will hopefully converge in the near future. So this is the first S about sovereignty.

Let me come to the two other ones. Promote international cooperation to avoid what we could call innovative fragmentation. And this is a very serious risk. So far, the international payment system was more or less preserved from the geopolitical and trade fragmentation we see elsewhere. It's very important to preserve that through the interlinking of fast payment systems, what we call TIPS for the euro area, and/or BIS common projects to develop shared ledgers, the so-called Agora project. We could reach this, this is the second S, seamlessness.

And through adequate regulation of stablecoin issuers, this is the third S about stability. MiCA in Europe was in '23 a good start, followed two years later by the US GENIUS Act. But both of them are not fully consistent and do not fully address all the risks that could arise from a rapid adoption of stablecoins issued by non-banking and low-regulated actors.

Don't forget, we all know that, but I always stress this anomaly that the first US dollar stablecoin issued globally, Tether, is registered in El Salvador. And as far as I know, this is not the safest financial place worldwide.

Let me add some thoughts on money on another issue which is at the crossroads of monetary, economic and financial sovereignty: the international role of the euro. As you are aware, and somewhat surprisingly, this international role was not mentioned as one of the objectives of the Maastricht Treaty. And to be honest, Victor, may I say it this way? The ECB did not really care during its two first decades. I'm part of it.

So, it's a half-cooked cake, if I may say it this way, with its successes and its limits. For obvious geopolitical reasons, I think it's highly time to change gear through at least three levels. A deepening of the euro financial markets, and there is a strong convergence between the internal objective, CMU, and the external objective and attractiveness of the euro, if we have a deeper and more liquid European financial market.

Second level, development of invoicing in Europe, and here let me quote China's example, associated with a reasonable, I stress the reasonable, development of repo facilities by the Eurosystem, so-called EUREP and now EUREP 2.0, and perhaps I'm more cautious, swap lines.

Third level, safe asset or safe assets in plural. This could also deserve another full speech, David, I won't deliver it today. I did it some months ago in Luxembourg. There are different ways to achieve it. And let me stress from the start, because when a French official speaks about the safe assets, there is always a suspicion that it could be a way for France to escape its national, its homework on fiscal discipline. It cannot be so, and I think I have spoken often enough about the urgent need for fiscal discipline in my country.

That said, the absence of such a euro safe asset compared to the huge market of US Treasuries is a self-inflicted wound, and it's a self-inflicted wound still more in a world of high public debt. There will be a competition for investors, there is already, and we play with a self-inflicted one.

I come to my conclusion, and David, I will quote the headline of your last book: Can Europe Survive? You will not be completely surprised that my answer is yes. And my answer is yes due also to another question: Must Europe survive? And here it's an obvious yes in the dangerous world we live in. We have no better alternative. And again, I'm interested by the UK debate, but we'll see.

Can I stress the fact that an American Pope, Leo XIV, made three days ago in my own eastern region of Lorraine a vibrant European plea exactly in this direction. I think it says something. It's not only our present framework, it's our duty. And not only for Europeans, for the rest of the world. But my yes is not a passive yes. It's a very active one. It's more than a wake-up call, it's a wake-up imperative. I tried to explain why. Thank you very much for your attention.

Thank you.

I'll make these seats a little bit more comfortable. Would you like to sit in the middle, François, and Joachim maybe over there? I'll ask, I'll sit here. I'll put these away. We could always try these out with some beer later on. No, no, but Joachim is right. If we had beer... But there's help. Oh, you have to be... because otherwise... Oh, yeah. And there's water, of course, as well. So, thank you very much. That was such a stimulating talk, François. And it's shown that since you have taken over as the chairman of the foundation, you have not given up thinking about geopolitics and monetary policy and the interlinkages. I think were totally fascinating in what you had to say just now, and I'm going to open this also to the floor as well, so that we can have some questions and answers. But I want to just start off with you, Joachim. At the conference which I attended, which you gave this week in the Bundesbank, you made the point about the central area of payments and technology, the points that was making as well in a very eloquent way. You said that if Europe gets the digital currency right, both at the retail level but at the wholesale level, which is already starting, it could make the issue of stablecoins obsolete. And bearing in mind we know how important the US dollar stablecoin is to the United States, because Mr. Bessent, as I said, it is a way of shoring up the exorbitant privilege, without a doubt, it's a hugely geopolitical project. So, what are the prerequisites? I believe Cipollone also said we need more than simply, we need an ecosystem, we need issuers. I also would like to mention the Greek finance minister, Kostis Hatzidakis, who also said in this issue about autonomy and sovereignty, he said very rightly, I think, that autonomy and sovereignty are not the same. He defined sovereign, I believe, as avoiding an asymmetric interdependence. That's also something you can't really fall in love with, but one knows what he means. How does payments and technology fit into all this, Joachim? And also, can the British play a role in this? When you were here just last week talking at the Society of Professional Economists, you made a very strong speech, I think, about the commonalities that there are between the UK and the rest of Europe, including in that payments area, and you spoke about a number of committees and so on. So perhaps you could address that potpourri of questions.

Can the UK play any role in this?

Just before I ask François a question, I wanted to say that I used to specialize in going around asking people whether they thought they would live to see German unification, and most of them said no. One of them was Helmut Kohl. So, but please, you'll go into that issue as well. But I also wanted to ask you about the United States, François, because this came up on several occasions in your speech, including when you spoke about Mr. Trump as being the stimulus for European togetherness. And you also made a very interesting speech at the London School of Economics last night when you were talking about quite technical issues like buybacks by the US Treasury, saying that the United States needs to get its house in order. So they're providing a stimulus in many ways, aren't they? Some positive, some negative. Perhaps you could go into greater depth of this because it clearly does play into this issue of payments where American technological companies have a vast amount of the market at the moment.

Can I first say that I completely agree with what Joachim said, with perhaps one, Joachim, if you allow me, about this debate between stablecoins, tokenized deposits, tokenized MMF. I can only see with you that the level of the volume of stablecoins is plateauing, but I think this is a technical discussion. As I said, the jury is still out. I'm not sure I believe in stablecoins. I am ready to bet on tokenization, which is a very promising technology. I don't know if some of you are specialists, I'm not, of post-trade and market infrastructures, but many people dedicated their life, billions and billions and hours and hours to building all the plumbing. It can be overly simplified, accelerated by tokenization. So I'm ready to bet it will happen, and this is why it's very important to have a European answer. I don't know in which precise form. On the question of the US, and first let me apply to payments. I don't know if both of you would agree that we have probably two competing or opposite trends. If I look at the geopolitical environment, many forces are playing at present against the US dollar, slowly, gradually. But if you look at Chinese rise, if you look at US fiscal policy, if you look, sorry to say that, at US political unpredictability, to say the least, but... and you added profligacy as well, didn't you? So put all the words in C, and you want all this, and we could say it last year already leads to a gradual erosion of the dollar. But on the other side, and here Joachim stressed it, the technology plays for the dollar at present if this evolution of innovation of tokenization happens first and foremost in the US. So it's two opposite forces, and I think it's very important to have our own answer. About the general stimulus, it could be an interesting physiological or psychological question if in our life a stimulus is positive or negative. I would tend to submit this way: in the case of the present US stimulus, it's broadly negative. If you look at the geopolitical and economic world we live in, it's worse since '24. There were other phenomena before, but it's worse. But the important thing for me is not the nature of the stimulus itself, it's the nature of the response.

And we called with him. It was almost exactly two years ago, November 24 in Frankfurt, for a significant French, German and European way. It's a threat, a negative stimulus. It's also an opportunity. But what is important is that our response is up to the task, up to the challenge. Much of our common destiny, and I include here the UK, is not in Trump's hands; it's in our own hands.

Well, I just want to put one question, and then I'm going to open it up to the audience. So if there are people who'd like to ask a question or put a point, please do get ready for this. But we had a dinner last night which you attended with Vítor Constâncio regarding this issue of the long journey of monetary union and all the things that need to be done, and he made the point that the fundamental issue is macroeconomic, because you can have a lot of technical issues, but because at the moment Europe still does have a fairly sizable current account surplus, it's absolutely necessary and completely pre-ordained that that's going to be invested abroad. So how do you get demand up by using some mechanical tools but some macroeconomic tools? I think you very helpfully pointed out that savings and investment union, they're just a means to an end. As you said, it's not something you can put on a placard. People will not go out marching in the streets for a savings and investment union, but they will go marching in the streets for more growth, jobs and investment. So how do you get the connect, Joachim? How do you make this thing popular and able to be done? And also using another word, flexible geometry or variable geometry — again, not a word that you will go out and shout out at demonstrations. What do we want? We want flexible geometry now. But how do you make that palatable and realizable in the political sense?

First, please come in, but I do think having a scorecard and having a calendar and ticking the boxes off for the Draghi report or something like that would be very, very helpful. Somebody needs to measure these things. What — it's a unique calendar. Everybody forgot what was in the single market — 300 directives or something like that — but everybody remembers the calendar because people, including business, thought it would be done. No, I completely agree with Joachim what you said. Can I here quote Margaret Thatcher? I think it's the right city to do it. No. She allegedly said — you will confirm it — 'Don't tell me what to do. I know already. Tell me how to do.'

And this is probably the question European leaders have at present. Everybody agrees in principle. But to progress on the how question, there are probably two sub questions. First is the why. And this is not the what. Vítor, here I will read with great interest your lecture because I understand you give answers to this why question: how to mobilize better European savings for European investment. And then let us be honest, we have another sub question on the how: that we have weak governments in most of our countries. That's true. If you allow me to stress it, it's true in our two countries, but not only in our two countries. It does not help. I think there is some hope and there are examples of governments and leaders who are at once strong and liberal and democratic. Let me take an example — let me take the example of a former central banker, Joachim. If ever you want to become chancellor in the German Republic — no, sorry — who is Merz, it's the best possible example. I hope that the next political cycle will bring a bit more clarity in Europe, but if not, there is another way, which is also a democratic one, is to give more powers to dedicated institutions. I mentioned the fact that for the deliverables I propose, we could imagine that by democratic decisions it shouldn't be self-confided, but a European institution is in charge of delivering. And we know why the euro worked, because there was the ECB and it's independent. So I think we should reflect a bit on this institutional level, and the idea promoted by Trump and other populists that independence is against democracy is completely wrong. Independence comes from democracy. It's decided by law and it stems back to democracy because you are accountable and you have to deliver on your result. If we didn't deliver on our mandate, we wouldn't be legitimate as an independent central bank. So again, I don't have the full answer to this question of political weakness, but it's obviously part of the how point.

Well, I think it's very good that a Bundesbank president is actually pleading for a little bit of extra deficit spending here. You don't hear that every day. We should always be very cautious with — Can I only say that it was not a criticism in my expression? No, no. Central bankers must never disagree. No, no, no. It happens on monetary policy, but we keep it for ourselves. But no, no, we've got questions from the audience. Just to say that it's a fact, this weakness, and it's a regret from my side, and I agree it's a very complicated task, but they are facing huge challenges, huge reforms to deliver, and they are weak. So Mr. Middleton has got a question here, and then we've got a — so please do, please be upstanding, with that wonderful stick that you've got these days. Remain — he looks far better when he's standing up. And say who you are as well.

I'm Phil Middleton. For those of you who don't know me, I'm, for my pains, deputy chairman of, amongst other things, and have to put up with daily beatings from my chairman. But, Governor, can I say thank you very much for an excellent speech. It was intellectually, as one would expect, highly rigorous, but also very passionate and inspirational. You might in passing want to follow Mr. Carney's example and enter politics. I believe there's a vacancy in Le Pen France awaiting at the time of speaking. My question is that a number of commentators have suggested of late the drive towards federalism within the EU has diminished alongside a rise in more nationalist politics, and the changes both you and, to a lesser extent, Dr. Nagel have been talking about — in other words, just simply a complete re-engineering of European banking and payment systems. Do you think the political will and the political engines to drive that exist, or do they need reworking beforehand?

First, thank you for your thanks. I don't know if I thank you for your suggestion about my possible political career. My wife happens to be here. She's keeping very neutral on this issue. No, she is still more reluctant than I am, and we have qualified politicians. Is quite comfortable with — Yes. But I don't know if it's a sufficient argument. But no, and here I agree with you. It's really — you need professional politicians. It's on the F-word, and I remember this discussion about the F-word some decades ago in this country. I think you are completely right. The aspiration towards federalism has vanished. I can regret it as a citizen, but I can only see it. So my personal answer would be to say we shouldn't have a huge institutional discussion. We should have a discussion about the deliverables, the projects, and the three ones I suggested: AI, clean energy, defense. And then we should look what practical means we need to deliver. The last important speech, in my knowledge at least, about this institutional question is Mario Draghi's speech in Louvain last February, and he spoke, if I am right, about a focused or a pragmatic federalism — the idea that only in some fields we should share sovereignty and deliver together. When I speak of possible dedicated agencies, and let me be honest, independent agencies, I think I am probably not very far from such a focused federalism. But I think the best way to explain it to our fellow citizens, as it is for the ECB, is: look, it's not a political choice. And 30 years ago we could have had this political discussion. It's a pragmatic way to fill the gap we have in these three fields.

Chris Crow from Capula. Thank you very much, Governor — or Governors — for being here. I had a question on monetary policy. The ECB is in the process of tightening policy. At the same time, we're seeing a sell-off in the long end of the bond market and widening in spreads, including in France. The ECB has a tool in its toolkit for dealing with situations where monetary policy transmission is perhaps impeded by spread widening and those sorts of developments. I was just wondering whether it's time to think about breaking the glass on the TPI, or at least dust it off and see whether it's ready to use.

Well, let's ask you on that, since you're on the council.

May I say that as a rule of conduct, I said I wouldn't comment on present ECB monetary policy, and this is a very comfortable rule facing your question. It is. So, thank you very much for this question.

If I may just interject something that you said yesterday when I was still at the LSE. Although you don't comment on the ECB, you did comment on the United States. I thought it's very interesting what you said about Scott Bessent's buyback, and he said, why doesn't he concentrate on doing the real job, which is to get fiscal policy in order? Would you like to just elaborate on that, because I thought it was a very useful conversation that you seem to be having virtually with Mr. Bessent on that issue. François?

You should invite him on stage. But no, perhaps quoting what I said: I added that the priority of governments should be to put their own fiscal houses in order. I added one small sentence: this is, by the way, true not only for the US but for many jurisdictions, starting with my own country. And here I can only repeat the bulk of the answer. I don't say 100%, but the bulk of the answer to the French fiscal problem is in French hands and in fiscal hands. It's as simple as that. And it's not a new message from the Banque de France.