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By David Thomas
     PARIS(MNI) - The ECB still hopes for the economy to strengthen during the
course of the year, and has the necessary tools to react in the event of a
deeper slowdown, Bank of France Governor Francois Villeroy de Galhau said on
     Here are key points from the text of his speech in Geneva:
     --"It's a slowdown, and not a recession, and we still hope for a
strengthening during the course of this year."
     --"At the global level, activity has slowed mainly because of trade
tensions due to the policy of the U.S. and uncertainty over Chinese growth."
     -- "We continue to closely monitor the economic situation; and there is no
doubt that we have the tools and a margin for manoeuvre which are powerful
enough to allow us to act as much as is necessary".
     -- He said that France is less exposed than Germany or Italy to global
trade tensions.
     -- "Among short-term uncertainties in Europe, the prospect of a very
damaging hard Brexit, is sadly less and less improbable".
     --"Monetary policy can't do everything - 'it can't be the only game in
town'. It is striking to see how the consensus on its limits has recently
reinvigorated the debate on fiscal policies".
     He said that this debate is justified by long-term challenges which are
putting upward pressure on fiscal policies, such as ageing populations and
climate change.
     --Conditions on a third round of targeted longer-term refinancing
operations will be "less exceptionally favourable than those of TLTRO-II".
     -- Villeroy de Galhau referred to Modern Monetary Theory which he said has
seduced the left wing of the Democratic Party of the U.S.
     "History - or geography in many developing countries today - unfortunately
proves to us on a number of occasions that the countries that wanted to monetise
their debt have also gone on to experience very painful economic episodes. The
major risk is of course inflation or even hyperinflation."
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$E$$$,M$X$$$,MT$$$$,M$$EC$]