The governor of one of the largest European central banks resigned suddenly, citing personal reasons
The news surprised everyone. Banque du France Governor François Villeroy de Galhau unexpectedly announced he will step down in June, a year before the end of his second term.
“It seems to me, after almost 11 years, that I will have fulfilled the essential part of my mission,” 67-year-old François Villeroy de Gallo announced in a letter to Bank of France staff.
In September 2015, the then President of the French Republic, François Hollande, nominated him for the position of Governor of the Bank of France. After receiving approval from Parliament, he was appointed Governor of the Bank of France in the Council of Ministers on 30 September 2015 and took office on 1 November 2015 for a 6-year term.
In October 2021, the President of the Republic, Emmanuel Macron, proposed that he be appointed for a second term, a decision approved by members of Parliament and then ratified by the Council of Ministers on 27 October 2021.
Villeroy de Galhau led the Bank of France through a turbulent economic period, marked by the first term of Donald Trump, the Covid-19 crisis and the war in Ukraine. Pleasing to control public spending, the central banker led a major reorganization of the Bank of France, cutting staff by nearly 30 percent and starting construction of a new banknote printing plant.
In 2022, the governor of the French central bank was seriously injured in Basel, Switzerland, when a 39-year-old Swiss hit him on the head with a hammer. The reason for the attack was not known, but the attacker was convicted of attempted murder. A court in Lausanne found that the attacker suffered from schizophrenia.
“Commitment and Dedication”
French Economy Minister Roland Lequier praised the “commitment and dedication of François Villeroy de Gallhau, who led the French economy through years of profound transformation.”
“His actions have always been guided by rigor, independence and concern for the public interest. I wish to express my gratitude for the work he has done in the service of the financial stability of our country,” added the French finance minister.
For several weeks, however, rumors have been circulating in the corridors of the Bank of France about a possible early departure. According to the information, he would have informed President Emmanuel Macron, as well as the head of the ECB, Christine Lagarde, as he is also a member of the European Central Bank's Board of Directors.
In a statement on the matter, Lagarde said: “I have deep respect for the personal decision of François Villeroy de Galhau to step down as Governor of the Bank of France after 11 years of loyal and dedicated service for the common good of France and Europe.
The Governing Council has benefited enormously from the realism combined with the strong European convictions and vision that it always brings to the table. His friendly, broad-minded, team-oriented, benevolent and consistently well-articulated contributions greatly enriched our discussions.”
Villeroy de Gallhau will then take over the presidency of a Catholic foundation dedicated to the protection of children
“This new assignment in a key social sector is very important to me, allowing me to continue to serve the public interest,” the central banker commented.
The resignation of the central banker, however, places France in a difficult phase. The French economy is struggling for survival. The French have consistently lagged behind the rest of Europe for more than a decade. The debt burden makes the country more vulnerable to external shocks and weakens its position within the European Union.
The Bank of France estimates that international and domestic uncertainty and political instability are costing France 0.5 points of GDP. And another 0.2 points of GDP is lost exclusively to national political instability. Given that GDP growth in 2025 is forecast at 0.9%, it is estimated that it could have reached 1.4-1.5%.
For 2026, the Bank of France forecasts stable growth, or even very slight growth, at 1% (1.2% in the euro area). The unemployment rate is expected to continue to rise slowly before starting to fall again in 2027. At the same time, household consumption could increase and once again become the engine of French economic growth.
France's main and most pressing problem is the deterioration of public finances. The public debt is growing, and with it, the repayment burden, with interest already representing 2.3% of GDP, double Germany's burden. In 2027, according to European Commission economists, interest payments on public debt will cost 2.8% of France's GDP, compared to just 1.2% in Germany.
While the country's GDP per capita at purchasing power parity was slightly above the eurozone average in 2013, last year it was 7% lower in 2024. This year, France's GDP per capita is expected to be below Italy's.
The country now plays in the second division, a term used in soccer to avoid stating the harsh truth: the French have become steadily poorer than the rest of the continent over the past 12 years. Deindustrialization has also had a negative impact on the economy: French foreign trade has registered a deficit of more than 70 billion euros in the last 12 months. “Any external shock in the coming years will have very serious consequences not only for France, but also for the EU itself,” European economists estimate.
