Question: Are you looking forward to visiting Iqaluit?
Answer: Yes, absolutely… with trepidation!
President Chirac was totally infatuated with the Inuit - he knew the Inuit civilization inside out, and he collected the art. So I am very much looking forward to seeing it, because I heard him talk about it.
Q: There seems to be an agreement in G7 countries that there needs to be more robust bank regulation, but a divergence in views over what kind of regulation is best. Jim Flaherty, Canada's finance minister, will be using the Iqaluit summit to push for stronger capital reserves. President Barack Obama is proposing a system where commercial and investment banking are kept separate and proprietary trading by banks is outlawed. Do you endorse any of those approaches?
A: My big concern is with a level playing field.
Stability and security are the overarching principles that should inspire any work that we do, because we don't want a relapse of the collapse. And I'm sure we share that view - we need stability, we need security.
But obviously we're all starting from different angles, because we have our respective field regulations, systems of law, business models for banks, numbers of players, and so on and so forth. There is a great diversity, and I think we have to be careful with one-size-fits-all solutions, but at the same time we need to secure a level playing field.
So what I see right now is a lot of good intentions on everybody's part, with a serious concern about one's domestic market and how to best offer that stability and security and respond to public opinion.
And we all share the same view, I'm sure, and we're all people of good will, but we need to be very careful with this level playing-field issue. Because what works with one set of banks or one country does not necessarily work with another set of banks or another country.
And we have to be attentive to all angles, because the way we set, for instance, capital requirements can be skewed by differences in the accounting systems, for example.
We need to preserve a level playing field because it's an industry that's by all means mobile; money can move around in next to no time. And that's where it's going to be difficult and sensitive, because you stand where you sit, and you predict what's going to work for your market without having necessarily the same level of concern for others.
Q: Are there areas where French banks need to change their structure or their level of regulation or their reserves?
A: All banks need to have a sufficient level of capital and a sufficient level of liquidity to avoid what happened. I think that's happening now in the Basel II system and in the revisions to Basel II - it's OK from the French bankers' perspective. That was checked and validated by our central bank, which is the ultimate banking supervisor for France.
So at this point of time, under present rules, they don't need to recapitalize.
Q: So the Basel II standards are adequate for bank regulation?
A: At the moment, they are. The problem is, as you know, that hey are not applied across the board. For instance, the United States is not applying Basel II principles. And I think they're quite resistant, and I hope we can understand why and understand what their timetable is.
I'll tell you one thing I hope we can achieve in Canada during the G7 meeting. It is a better understanding of the process and methods. I'm not pointing fingers or blaming anybody, but proposals are coming up here and there, back and forth, now and again, repeatedly, and investors, taxpayers, are losing a sense of the direction, in my view. We as members of government are here to try to coordinate and bring better coordination about.
So that would be my goal number one: better coordination and agreement on the principles and methods and processes we adopt, if we want to restore stability and security and avoid the collapse happening again.
Q: Do you think that President Obama's banking reforms are applicable beyond the United States banking system?