Christian Noyer, governor of the Bank of France (2003-2015) HARDtalk

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Christian Noyer, governor of the Bank of France (2003-2015)

Zeinab Badawi speaks to Christian Noyer, one of the most influential voices in global finance today. Is his selling of Paris as a financial hub following Brexit too tough?

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the country towards dictatorship. There are accusations that the polls


cannot be trusted. It is time for HARDtalk.


My guest is one of the most influential voices in global


finance. He was made Governor of the Central Bank of France following


extent of being governor for 12 years. Before that, he was the vice


president of the European Central Bank and has worked with every


leading financial institution. He has been tasked with making the case


for Paris as a financial hub following Brexit. Is he making too


difficult a cell and damaging ties with the UK -- sell. Christian Noyer


in Paris, welcome to HARDtalk This is the fourth President that you are


serving under in some senior capacity. Emmanuel Macron is a


former banker. Is he the right president at the right time for


France? Well, first, thank you very much for inviting me. I think yes,


absolutely. For the first time for many years, we have a president who


was elected with a clear political programme for deep economic reforms,


and he has a clear mandate to make difficult reforms in the labour


market, and the tax regime, to have something much more business


friendly, and this is going to take place quite rapidly. So I think that


comes exactly at the right moment, because we are now in, in Europe in


general, it in the eurozone, leaving the negative consequences the


crisis. Growth is picking up, and I think it is the appropriate time to


raise the growth potential and try to size the benefits of a full


recovery. We will talk about the reforms in France presently, but


just underscoring the approach, the intention to make friends more


competitive is so that it can compete, for instance, in trying to


pick up in picking up some of the business from the City of London,


post-Brexit. Why is Paris best placed? I think there are several


assets for Paris, which are generally recognised by all the


institutions I am talking to. The first one is probably that Paris is


the only big city comparable to London in size, with a range of


active and activities, which means that there is a whole range of


financial activities, big banks, and dealer and broker activities, but


insurance asset management, financial technology, and there is


no other comparable city in Europe. That is interesting, though. You say


all that, and that is your opinion, obviously. But when you look at what


major financial institutions are doing, they don't necessarily back


Paris. Japan's biggest bank has decided to set up its new based in


Amsterdam. Barclays have gone elsewhere. There is a lot of


competition, is in there? That is absolutely true. One is to make a


difference between the place where the financial institutions decide to


put their legal entity, and the place where they would locate their


activities. At a number of those which said that they would choose,


or have chosen to have their legal entity, at least for the first two


years, in, say Frank Little Amsterdam, or Dublin, they have told


me they intend to concentrate sizeable activities in Paris. --


Frankfurt. So it is not because the hub or the legal entity will be


somewhere that it will be a concentration of all activities


there. So I think it is a bit misleading to just look at those


news. By the way, MUFG that you just mentioned as already had a bank in


Amsterdam. So they keep using their banking there. Is this what you are


being told. -- told? A lot of institutions are looking at


Frankfurt, and of course Germany is the biggest economy in Europe. Many


banks has said that Frankfurt is going to be their main base. Are you


being told some indifferent behind-the-scenes? Absolutely. --


something different. In Paris, there is a talent pool. Other cities are


relatively small cities, and that includes transit. In franc that, for


instance, the activities are concentrated in banking. But if you


want to move a big number of staff, coming with families, spouses or


partners, and want to find jobs in other activities, it is more


difficult than in a big city like London or Paris. Who has


specifically said this too? Do you want to name some of the banks? --


said this to you. The majority of international banks, be they


Americans or Europeans or sometimes Japanese or Asian in general, they


tell me that, that they intend to put a sizeable part of their staff


in Paris. OK. As it stands, the figure is like 30% of the European


Union's financial assets managed in the City of London, which is twice


as much then London's nearest rival, Paris. London is admired globally,


and respected as your's financial centre. It does not necessarily mean


that any business lost to the City of London post-Brexit is going to go


the way of Frankfurt or Paris. Boris Johnson, the British Foreign


Secretary, said the real rivals of the City of London are going to be


in Hong Kong, Singapore, and New York. He has a point, doesn't he?


First, I don't believe that London will disappear as a major financial


centre. London will continue to have a very important role and


activities, and that is a good thing. In particular, given the


proximity and the facility to move between them London and Paris, I see


a lot of easiness in having teams working in London and teams working


in Paris. But more specifically to your question, if there are things


that institutions have two move, and they will have to move some


activities to the EU, it is because the rules will impose that those


activities are done in the EU. -- to move. If they have to move to the


EU, they cannot move to New York or to Asian places. They need to move


to the EU or be given up. All the institutions say they want to


continue servicing their clients, they do want to lose their capacity


to service them. They don't want to lose the business related to it. So


they will do what it is necessary to continue servicing the clients. So


you just said that you don't agree that the City of London would


necessarily suffer. So just broadening that point, do you think


Britain will suffer economically as a result of Brexit? Two first, to


the question, the City of London will lose something. There has been


over the last 20 years, the concentration of something. London


was the dominant financial centre, but Paris was an important financial


centre. A lot was done in other cities, Frankfurt and so on. So


there will be some loss for the City of London, but not to the point that


the city would be badly damaged. If the City of London loses 15 or 20%


of its activity, it will remain one of the biggest financial centres in


the world. Second, more generally, on that - it depends on agreement


that can be reached or not reached on trade. I think the most difficult


part of the negotiations is indeed related to trade, manufacturing


activities, agriculture and fisheries, and that will be


difficult. That is the most important in my view for the future


of the British economy. And there has been quite a controversy here in


the UK. Boris Johnson, the Foreign Secretary, and Liam Fox, the


international trade Secretary, perhaps not seeing eye to eye with


Philip Hammond and Amber Rudd over the issue of freedom of movement of


people post-Brexit. How does this row look from your side of the


channel? Well, I think the basic view of the EU 27 is that if you


want to continue to have full access to the market, be it for the


long-term, or for a transition period, you need to, to follow all


the major parts of the EU governance, and the EU governance of


basically the capacity of its institutions to regulate the


capacity -- to regulate, the capacity to reconcile disputes, and


powers that are in the EU rules, freedom for goods and services, and


financial flows, and not for people. After that, how it will be settled


exactly will depend on the negotiations, of course. As the


negotiations and the debate over Brexit continue, as we have been


discussing, other EU countries are trying to capitalise on the


situation post-Brexit. The French by Minister Eduard Phillippe has said


that France will use all its power to make Paris the European financial


capital. -- Prime Minister. But is this trying to capitalise on the


spoils are little unsavoury? Especially given the strong alliance


with the UK. I think you have two - I understand your question, but you


have two take two things into consideration. One is that


historically London has not been the financial centre of the EU for


decades and decades. -- to take things. The result of hybrid


concentration in London is the result of the single market, which


means that a single regulation and a single judicial system. -- high


broker concentration. Bizarrely, or to a point, the Grecian of the euro.


-- -- the creation. We reached a state which is very different to 20


years ago. Having the ambition to come back to what we had 20 years


ago, it is not aggressive in any way. Coming back to a normal state


of things. It is understandable that countries would be alive to the


opportunities that Brexit might provide to, you know, present a


different - different opportunities for countries. But what I want to


put to you is that the French seem to go farther. Jeremy Broun, who is


now the envoy for the Brexit operations of the City of London, in


a leaked memo said this: The French are happy to see outcomes


detrimental to the City of London, even if Paris is not the


beneficiary. They are crystal clear in their underlying objective- the


weakening of Britain. France sees Britain as anniversaries, not


partners. What is your response about? This memo, whatever has been


leaked, to me, is absolute nonsense. If I may say so. With all due


respect to whoever. He is reported to have this you, I don't know. I


did not check myself. But I think the report, the presentation is


really not that great at all. France is in the same position as the rest


of the EU. The position is embedded in a common position. The chief


negotiator is Michel Barnier. And he is the one who clearly said, and


will say it what needs to be said from this site, from the EU. So


there is no willingness to create problems for the City of London or


the UK. But one is to recognise that we have, we have eight common


concern, that is an enormous concern, and that is financial


stability. I mean, we just went through - the world just went


through an enormous financial crisis. We know it is absolutely key


to have the capacity to regulate and supervise, with full capacity, and


full powers, the financial sector, and a financial activities. And when


you have financial stability concerns, you have to make, to take


decisions as to what is best or worse in the different options that


are offered to you, and only those responsible for the monetary area


can do that. So it must be the EU institutions having this power. And


I cannot imagine- if it was imaginable that the City of London


was dealing with the euro, and would be regulated by EU institutions,


where the judge would be in the European Court of Justice, but the


central bank, with full, 100% power, in the euro system, and the market


regulator would be established in Paris, with no powerful Westminster,


or the Bank of England, or for the UK regulator, then maybe we could


have another system. But I do believe that this is, that this is


imaginable. This is why we believe that...


A rather large and so. The election of a medal in May, we are seeing


France in a more assertive way than it was under Francois Lond. --


Emmanuel Macron. He wants to make it more market oriented. There is a


great deal of opposition within fronted self from ordinary citizens.


-- France itself. The labour market reform, the first one to be


implemented, is a perfect example of something which is processed quite


smoothly and very well. There have been many discussions with the


unions. There was no big opposition. Can I just interrupted? The CGT is


saying it is getting ready for street protests for relaxing these


labour laws, to make it easier to hire and fire workers. We will have


to wait and see. At the moment, things are going smoothly. The


discussions have gone through all of the topics. For a number of things,


it was largely consensual. The Parliament as well has an enormous


majority, well beyond a simple party supporting President Macron. But


there is still... Can I just say, there is still protesting going on.


800,000 students upset about cuts to allowances. Civil servants,


teachers, several sectors are opposed. Well, you should not mix


everything. There was no big demonstration at the moment. Nothing


happened in Paris. No one is in the streets demonstrating. Yes, there


was some opposition expressed about some fiscal measures taken. The


government has to make cuts in spending. They tried to find ways to


do that as smoothly as possible. But it... The problem exists in all


countries, in many countries. I want to come back to the series of


reforms, we don't have time to go into all of them, they are to make


France more competitive, but it is perceived in that way. For example,


the French economic observatory had a study in July saying the richest


10% in France gave the most from the overhaul from income and property


taxation. I cannot go into that completely but that is one example,


and also, the measures hit the poorest foremost. That is a quote.


When you meet the press, you don't get that feeling there is such


opposition at the moment. I have never seen in many years so much


consensus to support the global economic reforms in the making. I


think people are ready to understand that labour market reforms are aimed


at reducing unemployment that we have not been able to reduce


significantly over the last decade. It is something we have not tried


until now. Until the first reforms were made. It is rather consensual.


They address the problem of unemployment. But you have got a


huge... Sorry. The tax reforms. Of course, the direct taxation would be


the wealth tax, income tax. It is extremely concentrated in France.


OK... 60% of... We cannot go into the details of the taxation system.


But one other example as to why perhaps it is not as smooth as you


suggest. President Macron has seen his approval ratings plummet by ten


points to 54%, the best declined when compared to predecessors, like


Francois Lond and Nicolas Sarkozy. -- Hollande. I don't want to


comment. I am not a political and take. That was just an example. But


in general, the policy was widely supported. At least for the moment.


The people so want to give a chance to be president and the government


to make the economic reforms and move ahead. Of course, you have to


make cuts in expenditure, and it always creates opposition. I don't


think it is significant. There is still the necessary support to make


these reforms. It really addresses unemployment. But you are going to


have, in terms of the image of France, that its reputation is still


a place that is difficult to do business. France was 29th in terms


of this. The UK, seventh. In June, a report said a banker in France costs


54% more when all payroll charges are included. It takes you three


years to fire someone in France compared to three months in


Switzerland and three days in the UK. You have still got a long way to


go to convince people that somebody such as US tried to do this. What I


can say is that it is misleading. -- such as you is trying to. It does


not take three months. It takes 4-6 months. It is comp ruble to Germany,


the maximum in Germany, or the UK. -- comp comparable. All of those


reports I made... I am telling you... They are not... Can I


interrupt you to give you the source? It was the Head of UBS


France, who told a committee earlier this year. It is a recent statement.


Well, it was probably taken from reports done four years ago. Before


2013, yes, the situation was really different. But in the meantime, we


have made four incremental reforms on the labour market. I think we


already have the situation which is not so different from Germany. And


with new reforms, we will move somewhere a twin Germany and the UK.


-- between. Hopefully closer to the UK. It will be a different


situation. It won't be that far away from the UK, perhaps Ireland. It


will have a more flexible labour market. Christian Noyer, in Paris,


thank you very much indeed for coming on HARDtalk. Thank you very


much. The area of low pressure that


brought Wednesday's rain


Zeinab Badawi speaks to Christian Noyer, one of the most influential voices in global finance today. He was made honorary governor of the central Bank of France, following a period as governor for 12 years. Prior to that, he was a vice president of the European Central Bank and has worked for various leading international financial institutions.

Christian Noyer has been tasked with making the case for Paris as a financial hub following Brexit. Is he making too tough a sell and potentially damaging ties with the UK?