The Annual Report describes the action taken by the Banque de France over the year to fulfil its three core missions: monetary strategy, financial stability and services to the economy and society. It presents the work of the women and men that make up the Bank’s staff, placing particular emphasis on corporate social and environmental responsibility. The final section provides details of the Bank’s financial management and its financial statements for the year.
By François Villeroy de Galhau
Our country and our continent were severely tested in 2022 by the outbreak of war on Europe's borders, which triggered an energy crisis and set off a chain-reaction of economic effects. The Banque de France acted forcefully to cushion the resulting difficulties and fight inflation. However, to keep the economy on a favourable course, sustainable adjustments to adapt to the new situation are even more critical than protections. The challenge facing us is therefore to achieve three key transformations: the energy and climate transformation, the digital transformation and the transformation of work. This annual report pays tribute to the hard work done in pursuit of this goal by the more than 9,000 women and men who make up the Banque de France’s staff. Despite popular beliefs about the “comfortable” position of public servants, our staff were once again presented with unprecedented challenges in 2022 and responded with resolve and innovative solutions. We will continue to demand the very best from them – such high standards are at the core of public service. In 2022, we also hired more than 500 new employees, invested in our IT system and property, supported career advancement and recognised performance. We extend our warmest thanks to every single member of our personnel.
"The Banque de France is adapting, changing and providing support, as it works to serve the people of France"
A major highlight of 2022 was the economy’s resilience to the consequences of Russia's invasion of Ukraine. In 2022, French growth turned out to be better than feared, reaching 2.6%, although the pace slackened markedly towards the end of the year. The euro area as a whole likewise showed resilience and recorded a 3.5% expansion. However, after a decade of overly low inflation and even a risk of deflation in 2020, inflation made a comeback. At 5.9% in France on an average annual basis, and 8.4% for the euro area, it is above our target and the top concern of our fellow citizens. A firm monetary policy response was needed to counter the spread of higher energy and food prices to many economic sectors, because entrenched inflation would be the worst enemy of confidence and hence of growth. Our monetary strategy commitment is to bring inflation back towards 2% by end-2024 to end-2025, i.e. over a two-year horizon, which is how long it takes for monetary policy to have its full effect. This approach delivered a rapid increase in interest rates, which rose from –0.5% in the first half of 2022 to 3% by March 2023. Higher rates are being passed on to financing conditions in a gradual and orderly manner.
The French financial system proved resilient to the risks posed by the economic slowdown and capable of financing the economy under good conditions. This financial stability made it possible to absorb the shocks linked to intensified geopolitical risks, to be stronger in the face of cyber threats, while incorporating extra-financial information aimed at promoting sustainable financing. In the financial sector, we also provided support for the digital transformation, with the goal of fostering innovation while maintaining fair and safe access for consumers. However, in view of the disrupted developments that have characterised the crypto-asset markets, extreme vigilance continues to be required. The Banque de France and the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority) are advocating for coordinated regulation at international level, according to the “same activities, same risks, same rules” principle. In 2022, we also continued to lay the groundwork for the potential currency of the future, the digital euro, which would work alongside banknotes, offering a new payment solution.
The Banque de France differs from the other main central banks in terms of the importance of its mission providing services to the economy and society: the work that we do locally with households and companies includes managing household debt resolution applications, ensuring access to basic bank accounts and means of payment, company rating and credit mediation. We also continue to make digital diagnostic tools available to companies. The war in Ukraine was a stark reminder of the urgent need to reduce our reliance on fossil fuels and therefore make a successful energy transition. To support the economy in this transformation, we are developing a climate indicator to measure the progress made by companies in the climate transition.
Implementation of Building 2024 Together, our strategic plan, will safeguard our ability to fulfil our missions and innovate. As 2022 drew to a close, we updated our plan to prioritise the inflation challenge and consolidate our activities around four key goals: Anchor stability; Anticipate innovation; Accompany our fellow citizens; Attract talent. Backed by the women and men of both the Banque de France and the ACPR, we share the goal of building one of the Eurosystem's best central banks and one of our country's finest public services. In these times of great uncertainty, we are resolved, more than ever, to be a trusted institution in the service of the people of France.
2022 key figures
The Banque de France in 2022:
missions: monetary strategy, financial stability, services to the economy and society
values: independence, expertise, sustainable performance, openness, solidarity
full-time equivalent employees
2022 was marked by the war in Ukraine and its impacts in Europe, which affected the wider economy and fuelled considerable uncertainty. Although barely out of the Covid crisis, France showed strong resilience, as growth reached 2.6% and the unemployment rate fell to 7.2%. However, France's government debt stood at 112% of GDP and inflation averaged 5.9%.
In the face of this mixed situation, and against a backdrop of environmental and social concerns, what action did the Banque de France take?
1. Support for the economy through monetary policy
- Increase in energy prices and spread of inflation to other sectors
- Acceleration in inflation
- Resilient activity in France
- Policy normalisation: a forceful response to bring inflation back towards 2%
- Securities purchase programmes halted
- in April for the pandemic emergency purchase programme (PEPP)
- in July for the asset purchase programme (APP)
- recalibration in October of the conditions for targeted longer‑term refinancing operations (TLTROs)
- Increase in policy rates
- On 21 July, the Eurosystem officially stopped providing forward guidance on policy rates
- More responsive monetary policy, with decisions taken according to a meeting-by-meeting approach
- July: initial increase of 50 basis points (bps), or 0.5%
- September: 75 bps increase
- November: 75 bps increase
- December: 50 bps increase
- This raised the deposit facility rate to 2.00%
- Normalisation of financing conditions
Interest rate on bank loans in December 2021 (non-financial corporations)
Interest rate on bank loans in December 2022 (non-financial corporations)
Interest rate on bank loans in December 2021 (French households)
2. Resilience of the French financial system
- War in Ukraine: contribution of technical and operational expertise to prepare and implement financial sanctions against Russia
- Energy crisis: enhanced oversight of French participants’ exposures to these markets
- Cyber risk: proactive role in implementing Europe’s Digital Operational Resilience Act (DORA)
- Uncertainty of the macroeconomic and financial environment: banks and insurers are sound, but precautions required
3. Digitalisation of finance
- The crypto-asset market shrank by a factor of around three relative to its peak in November 2021: USD 800 billion in capitalisation
- The European Union adopted its first crypto-asset regulation: Markets in Crypto-Assets (MiCA) Regulation
- Continued work by the Eurosystem on a central bank digital currency (CBDC)
4. The climate transition challenge
- The Banque de France and the ACPR are stepping up the attention paid to climate change-related risks
- The exercise by the Single Supervisory Mechanism (SSM) underlined the need for banks to accelerate efforts to develop their climate stress testing frameworks
- The European Insurance and Occupational Pensions Authority (EIOPA) conducted its first climate stress test
- First supervisory work on environmental, social and governance (ESG) disclosures by financial institutions, in accordance with European and French obligations
- Goal of redirecting capital flows to sustainable economic activities by enhancing the disclosures provided to retail investors on the ESG characteristics of investment vehicles
5. Supervision of market practices for consumer protection
- Key inspections in 2022:
- Procedures used to market life insurance contracts
- Fees charged to retail investors
- Compliance with the cap on bank fees charged to customers for account-related incidents
- Freedom to choose loan insurance for housing loans
- Joint unit with the Autorité des marchés financiers (AMF)
- Assurance Banque Épargne Info Service website: over 2 million pageviews
unauthorised websites or firms included on blacklists
6. Nationwide public service for households and companies
• Support for businesses
levels of risk (new rating scale)
non-financial corporations rated (chiefly SMEs)
applications for credit mediation
jobs saved at 860 companies
start-ups provided with financing support
• Protection of financially vulnerable people
applications for debt resolution
Over 800,000 people eligible for special “vulnerable customer” solutions
Over 6 million customers eligible for cap on incident-related fees
• More accessible communication
viewers on internet and social media for the Monetary Policy Forum
pageviews for our financial education resources (EDUCFI)
workshops for 5,300 young people enrolled in employment integration programmes at over 200 organisations
high school students received EDUCFI “passports” after completing financial literacy training
workshops organised for 1,200 people with literacy difficulties
2022 key figures
1. Monetary strategy
1. Maintain a stable currency, which is an important public good:
- by participating in preparing monetary policy decisions by the Governing Council
- by implementing monetary policy decisions
- by analysing statistics and preparing economic forecasts to provide valuable insights
2. Maintain confidence in the currency in all its forms:
- by printing the Europa series of banknotes, which include innovative security features
- by putting banknotes into circulation and maintaining banknotes and coins
- by ensuring security and driving innovation for all payment instruments
- by maintaining central bank money as the anchor of the payment system
3. Consolidate our position as the central bank for markets:
- by managing the state’s foreign exchange reserves
- by ensuring the smooth functioning of capital markets, so that the Paris financial centre is secure and efficient
2022 in pictures
- 31 March: End of asset purchases under the pandemic emergency purchase programme (PEPP).
- 9 June: The Governing Council decides to end purchases under the asset purchase programme (APP) on 1 July.
- 12 July: Publication of the Governor's letter to the President of the Republic, entitled How can we reduce inflation?
- 27 July: First policy rate increase (50 basis points, bps).
- 27 August: Speech by the Governor at Jackson Hole, entitled “Monetary policy post-pandemic – balancing between science and art, predictability and reactivity”.
- 14 September: Second policy interest rate increase (75 bps).
- 11 October: Speech by the Governor at Columbia University, entitled “What monetary policy narrative after forward guidance?”
- 2 November: Third policy interest rate increase (75 bps).
- 21 December: Fourth policy interest rate increase, raising the deposit facility rate, the main refinancing rate and the marginal lending facility rate to 2.00%, 2.50% and 2.75% respectively.
French GDP growth (annual average rate)
French HICP inflation (annual average rate)
Euro area HICP inflation (annual average rate)
Average interest rate on new housing loans in December
rises in central bank key interest rates
Normalising monetary policy to return to price stability
After a vigorous economic recovery in 2021, the surge in energy prices triggered by the invasion of Ukraine caused inflation to accelerate on a scale not seen in decades. In response, the Eurosystem, of which the Banque de France is a member, normalised monetary policy by halting its asset purchase programmes and raising interest rates.
1. Despite Russia's invasion of Ukraine and the sharp upward surge in prices, economic activity held firm in 2022
Prices climbed in 2022 at a pace not seen in decades, in both the United States and the euro area. In the previous year, inflation was initially driven by supply-side disruptions linked to the Covid-19 pandemic. In 2022, the massive increase in energy prices that followed Russia's invasion of Ukraine spread to goods and services.
A widespread return of inflation
Widespread inflation in the United States, euro area and United Kingdom
The post-Covid economic recovery drove up oil and commodity prices and created supply-side bottlenecks, which caused prices to start climbing globally from mid-2021. These factors, which remained present in the first half of 2022, were then amplified by the energy crisis following Russia's invasion of Ukraine on 24 February.
In the United States, the initial demand shock that caused inflation to begin picking up again in 2021 is fading. Ongoing monetary tightening and slackening demand combined to slow the pace of increase in energy and goods prices, and inflation appeared to peak at the start of the summer of 2022.
In the euro area, inflation primarily linked to imports in 2021 suffered an additional shock in 2022 when Russia invaded Ukraine, which pushed food, gas and electricity prices upwards. While inflation is still mainly imported, service prices have gone up, moderately for now, but the pace could accelerate in the coming months. Forecasts indicate that euro area inflation will peak in the first half of 2023.
The United Kingdom is also experiencing an inflationary shock due to higher energy and food prices and the tight labour market, which is leading to sharp wage gains.
In the United States, the euro area and the United Kingdom alike, by the end of 2022, the general level of consumer prices had increased by approximately 16% since February 2020.
Euro area activity in 2022 and outlook
In 2022, euro area economic activity was deeply affected by countervailing forces. On the one hand, the resumption of some activities, particularly in the service industry, such as accommodation, catering and tourism, supported growth and employment through to the third quarter, especially in economies in the Mediterranean region. On the other, the surge in energy prices (chiefly gas and electricity) undermined household confidence and fuelled considerable uncertainty in the business sector.
Driven initially by energy prices, inflation rose steadily over the year, spreading to other consumer items, including food, manufactured goods and services, owing to higher input costs and wages. In 2022, headline inflation and core inflation, which excludes food and energy, reached levels not seen since the euro was introduced, at 8.4% and 3.9% respectively.
Although significant fiscal measures were deployed to support purchasing power, household consumption and business investment stalled in the last months of 2022. And while euro area growth was elevated overall, at 3.5% in 2022, activity was flat in the fourth quarter, with an expansion of just 0.1%.
Activity is expected to continue to decelerate in early 2023, before picking up again towards the middle of the year. It should be buoyed by the upturn in investment, with support from the Recovery and Resilience Facility, and by the global economic rebound. The euro area economy is expected to expand by 0.5% in 2023, according to the Eurosystem’s projections for December 2022. After dropping by more than 2 percentage points, meanwhile, inflation is expected to stand at around 6% in 2023 and is projected to remain above the 2% target in 2024.
In France: activity held firm in 2022 and is expected be robust in 2023
Activity held firm in 2022
GDP growth remained sustained in France in 2022, at 2.6% on an annual averagel basis, owing to a strong post-Covid bounce that began in the second half of 2021. With the lifting of the last remaining health restrictions, which benefited several economic sectors, including market services, GDP rose by 0.5% in the second quarter of 2022, then by 0.2% in the third. Activity subsequently slowed in the fourth quarter, when it grew by 0.1%.
A slowdown expected for 2023, followed by recovery in 2024-25
Activity is expected to slow markedly in France in 2023, with annual GDP growth of 0.3% according to our December 2022 projections. Despite strong government support for household purchasing power, domestic demand components are set to be adversely affected by the external shock caused by the war in Ukraine. Indeed, with the shock spreading to overall prices, inflation is expected to remain at an elevated level in 2023, peaking in the first half, which will depress purchasing power and, hence, consumption. The high level of inflation will also contribute to eroding corporate profit margins, which will in turn lead to a pronounced slowdown in employment. However, this projection is subject to considerable uncertainty, as reflected in the -0.3%/+0.8% range for our growth projections. A recession cannot therefore be ruled out. However, if one were to occur, it would be small and short-lived.
Once the peak of the strain on commodity prices and energy supplies passes, a recovery phase is forecast to begin in 2024, when annual GDP growth is expected to reach 1.2%. This expansion should gain strength in 2025, with GDP gradually moving back towards its pre-Covid trend, although a substantial gap remains relative to the trend at the end of the projection horizon.
2. Our efforts to bring inflation back towards the 2% target
Fighting inflation is our responsibility and the primary objective of our mandate
The Eurosystem’s objective is to maintain price stability, i.e. inflation of 2% over the medium term.
Deflationary risks between 2014 and 2021, which were exacerbated by the Covid pandemic in 2020, required a highly accommodative monetary policy:
- interest rates were cut to historically low levels to provide favourable financing conditions to households and companies;
- Eurosystem central banks set up asset purchase programmes to inject the liquidity needed for the economy to function properly.
In 2022, as inflation made a resurgence and spread to many goods and services, with the above-mentioned consequences in terms of reduced household purchasing power and corporate profitability, a resolute response was needed – and continues to be needed – to bring the level of inflation back towards 2%. This led to a change in the monetary policy stance from that which had been pursued up to that point for almost a decade. The normalisation of monetary policy in 2022 was the first stage in the fight against inflation. It will be followed by a second stage in 2023, with more rate hikes and measures to shrink the Eurosystem's balance sheet.
Withdrawal of non-standard measures and policy rate hikes
In 2022, the Eurosystem's monetary policy actions initially involved the gradual withdrawal of the support measures first introduced in 2015 to combat too low inflation and then strengthened in 2020 to offset the adverse impacts of the health crisis on the economy and inflation. Net asset purchases were halted in April for the pandemic emergency purchase programme (PEPP) and in July for the asset purchase programme (APP).
Targeted longer term refinancing operations (TLTROs) were recalibrated in October, helping to normalise bank financing costs and removing deterrents to voluntary repayment of these operations. Reducing outstanding TLTROs plays a part in reducing the size of the Eurosystem's balance sheet.
In addition, on 21 July, the Eurosystem officially stopped providing forward guidance on policy rates. Faced with geopolitical and economic uncertainty, we moved to a more responsive monetary policy, with decision-making carried out on a meeting-by-meeting basis using an analysis of changes in economic indicators.
The gradual cessation of non-standard measures was followed an increase in policy rates. An initial hike of 50 basis points (bps), or 0.5%, took effect on 27 July, ending almost a decade of negative policy rates. This was followed by two further 75 bps increases, on 14 September and 2 November respectively, and an additional 50 bps hike on 21 December, bringing the deposit facility rate to 2.00%.
A monetary strategy deployed in stages
By ceasing asset purchases – and hence the expansion of its balance sheet – and then gradually raising policy rates, the Eurosystem ended the exceptional monetary accommodation that characterised the years of excessively low inflation and that provided extremely favourable financing conditions. At end-2022, the deposit facility rate reached a level considered to be that of a nominal “neutral rate”, i.e. the theoretical equilibrium rate at which inflation neither accelerates nor decelerates.
Policy rates are the primary instrument used to implement the Eurosystem's monetary policy stance. At its meeting of 15 December 2022, the ECB Governing Council decided, based on upward revisions to the inflation outlook, to continue to raise interest rates significantly and regularly. The aim is to achieve levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target. Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations.
At the same December meeting, the Governing Council also announced that from the beginning of March 2023 onwards, the portfolio of assets acquired through monetary policy operations would begin declining at a measured and predictable pace.
3. After being exceptionally favourable for some time, financing conditions are normalising
Interest rates on loans to individuals and companies are rising gradually from record low levels
After several years of historically low nominal and real interest rates, bank rates rose gradually in 2022.
The cost of bank loans to non-financial corporations increased in France by approximately 191 bps between December 2021 (1.3%) and December 2022 (3.2%), which was less than in Germany (225 bps) and Spain (213 bps). The cost of market financing for companies rose faster than the cost of bank financing in 2022, especially for large businesses.
The cost of bank loans to French households went up at the same time. From a low of 1.1% in December 2021, the average interest rate on housing loans reached 2.05% in December 2022, which was a far more gradual increase than that seen in other European countries. The increase only affected new loans, as existing housing loans are virtually all at fixed rates.
The increase of recent months, which has generally been more gradual and smaller than in other European countries, has brought interest rates closer to their medium-term average, reflecting the return to a normalised situation.
Households and companies show good resilience to the energy shock
On behalf of the government, the Banque de France manages the overindebtedness procedure, which seeks to provide solutions to difficulties experienced by overindebted individuals. In this capacity, the Bank uses data that enable it to assess the financial position of households. In 2022, the number of applications for household debt resolution fell compared with 2021, confirming the trend decline in these challenging situations (see Chapter 3: "Services to the economy and society").
In 2022, companies also made less use of credit mediation services than in 2021. However, we must remain on our guard: the net debt of French companies, measured by total bank loans and debt securities minus cash (including the securities of collective investment schemes), gradually rose by approximately EUR 83 billion in 2022 (cumulative, over 12 months). This growth reflects increased take-up of equipment loans, but also the reduction in cash reserves built up during the Covid period.
4. Currency in all its forms
Launch of the National Payments Committee and creation of the Directorate General Cash – Retail Payments
The National Payments Committee (CNMP) was established on 4 October 2022. It coordinates organisations and innovation relating to all payment instruments, including cash. It is chaired by the Banque de France and brings together representatives of government, the payment industry, consumers and merchants.
The committee has already issued recommendations to ensure that disabled or digitally excluded people have access to inclusive and high-quality payment instruments.
A Directorate General Cash – Retail Payments was set up to act as a hub for all the staff that work with retail payment instruments, from printing banknotes and issuing and maintaining euro banknotes and coins in circulation, to conducting research and supervising cash and non-cash payment instruments, such as payment cards, credit transfers, direct debits, cheques and digital currency. With the support of its staff, whose expertise and innovative capabilities are widely recognised, the new Directorate General will execute the Bank's task of making sure that people can exercise their freedom to choose from a range of accessible, safe and modern payment instruments, which will maintain confidence in the currency.
Banknote manufacturing and quality of cash in circulation
The Banque de France plays a leading role in manufacturing banknotes for the Eurosystem. It also prints banknotes that circulate in over 20 countries and provides advisory and support services in the area of banknote expertise and currency issuance. In 2022, it printed over one billion euro banknotes (€5, €20 and €50 denominations). It also delivered around two billion banknotes in other currencies to major foreign central banks.
The findings of the SPACE II survey released in late 2022 showed that cash remains the most widely used means of payment in the euro area, although its share of the total is shrinking. In France, the share of cash payments in shops fell from 57% of transactions in 2019 to 50% in 2022.
Under its national cash management strategy, the Banque de France enhanced its nationwide organisation in 2022. Acting in partnership with cash-in-transit companies, it set up auxiliary banknote storage facilities across the country to help the cash industry operate even more efficiently.
Getting ready for the digital euro
In July 2022, the Eurosystem set out the main goals that could justify introducing a digital euro. This new euro, which would be made available to the general public, would be a central bank currency for the digital era. It would thus help to preserve the anchoring role of central bank money. A digital euro could also help to strengthen Europe's economic efficiency and strategic autonomy.
The Governing Council validated guidelines on certain design features that would contribute to the achievement of these objectives, in parallel with the forthcoming European legislative work on the legal basis and characteristics of this new form of public money. To ensure that the digital euro is integrated into the existing payments ecosystem, it would be distributed by approved payment services providers, including commercial banks, which would handle the management of future digital euro accounts or portfolios and customer relations. In addition, steps would be taken to affirm the digital euro's role as a payment instrument and not an investment asset. For example, holding caps would be established, as they are with Livret A passbooks in France.
The Eurosystem's investigation phase will continue until the end of 2023. At that point, the Governing Council will decide whether to move on to the realisation phase. This phase, which would last approximately three years, could pave the way for issuance of a digital euro by 2026-27. Such issuance would require a legal basis and approval from Member States and the European Parliament.
Household inflation expectations survey
The high level of inflation is an issue for French citizens in their daily lives and a key concern of the Banque de France. A prerequisite for price stability is that prices and wages set today do not incorporate expectations of sustained price increases in the future. In such a case, price increases could become self-sustaining, fuelling an inflationary spiral.
It is therefore vital for the Banque de France and the ECB to understand how inflation expectations are formed, particularly by households. For the first time, in 2022, the Banque de France commissioned CSA, a research firm, to conduct a survey, which involved 5,054 residents aged 18 and over. The survey was carried out between the end of April and mid-June 2022, i.e. approximately two months after the start of the war in Ukraine and the pronounced rebound in inflation. The survey's main findings were as follows:
- 60% of French residents surveyed think that inflation and purchasing power are the main economic challenges right now.
- 82% of households think that monetary policy has a rather significant or a significant impact on their purchasing power.
- Inflation expected by households is linked to the level of inflation that they perceived over the previous year.
- Perceived inflation levels vary from household to household. These differences are partially due to the characteristics of respondents, including gender, age and educational level. They also depend on the frequency of certain purchases and movements in prices to which they are particularly sensitive, especially fuel.
Addressing structural challenges to strengthen growth and reduce inflation over time
Supply-side policies need to take over from demand-side policies to boost potential growth. By mitigating vulnerability to shocks, for example through greater energy diversification or by increasing the skills available on the labour market, supply-side policies help to ease long-term inflationary pressures. They also improve the economy's resilience to future shocks and transitions.
France needs to conduct three transitions, two of which – the environmental and digital transitions – are challenges that are shared by the whole of Europe. During these transitions, obstacles to the reallocation of resources to future sectors, such as inadequate skills on the labour market, could hold back productivity gains and stoke persistent inflationary pressures.
A third challenge is specific to France and concerns the supply and quality of labour. Hiring challenges and the job vacancy rate, which reached record high levels in 2022, testify to growing strains on the labour market. These curtail the ability of France's industrial fabric to make adjustments.
For this reason, the economic transition must be accompanied by structural policies designed to facilitate research and innovation, the dissemination of technologies and skills-building in the labour force. Regulatory incentives, implementation of the green taxonomy and supports to redirect financing and promote the emergence of green technologies are necessary to decouple GDP growth from that of greenhouse gas emissions. Proactive labour market policies should help the elderly to improve their access to employment and bolster efforts to promote lifelong and vocational training.
Monetary Policy Forum
Euro area central banks have been keen to communicate more about their mandate to their citizens. They want to understand people's concerns and to be more educational and transparent when explaining the monetary policy executed by the Eurosystem and decided on by the ECB Governing Council.
Pursuing the goal of clarity not only fulfils a vital democratic responsibility, it also promotes economic efficiency: a monetary policy that is better understood by all economic participants, including households and businesses, will be transmitted to the economy more successfully and hence be more effective.
With this in mind, the Banque de France conducted a survey between April and June 2022 of 5,000 French residents to measure their expectations in an environment of unusually heightened economic uncertainty (see Focus above: "Household inflation expectations survey"). Respondents identified inflation and purchasing power as their top concerns.
The Banque de France presented the findings of the study at the Monetary Policy Forum held on 6 July 2022 at the Banque de France's head office in Paris. The Governor, alongside Nathalie Aufauvre (Director General Financial Stability and Operations) and Olivier Garnier (Director General Statistics, Economics and International) fielded people's questions about monetary policy, inflation and many other topics. The event was attended by over 250 participants and watched by around 500,000 contacts on the internet and social media.
2. Financial stability
1. Ensure the soundness of the financial sector:
- prudential supervision of banks and insurance firms
- protection of customer interests
2. Anticipate and prevent risks:
- assessment of new risks
- contribution to regulatory changes
- support for banks and insurance firms as they navigate the digital transformation
3. Ensure the smooth functioning and security of payments:
- prevention of systemic risks
- smooth functioning of payment and market infrastructures
2022 in pictures
- 1 January: Decision D-HCSF-2021-6 of the Haut Conseil de stabilité financière (HCSF – High Council for Financial Stability) on lending standards for housing loans enters into force.
- 17 February: The ACPR publishes its first report on governance of climate change risk in the insurance sector.
- 24 March: The Network for Greening the Financial System (NGFS) publishes a report on the macroeconomic and financial implications of nature-related risks.
- 30 June: The Banque de France publishes its semi-annual report on the assessment of risks to the French financial system; the second report came out on 27 December.
- 6 September: The NGFS publishes the third edition of the climate scenarios.
- 20-21 September: The Banque de France conducts a crisis management test within the framework of the Paris Resilience Group.
- 27 September: The Banque de France organises an international conference on crypto-assets and financial stability, and the role played by central banks in this ecosystem.
- 27 December: The HCSF adopts a decision (D-HCSF-2022-6) regarding the increase in the countercyclical capital buffer to 1% (definition in the chapter to come), in the wake of the decision of 7 April (D-HCSF-2022-1) on an initial 0.5% increase.
on-site inspections of insurance firms and banks and their business practices (excl. Single Supervisory Mechanism or SSM inspections)
inspections performed on behalf of the ECB (SSM framework)
Common Equity Tier 1 ratio of the six main French banking groups
Average solvency capital requirement coverage ratio for supervised insurance corporations
French banks’ share of the total assets of euro area banks
French insurers’ share of the total assets of euro area insurance corporations
Strengthening the resilience of the French financial system
The Banque de France, together with the High Council for Financial Stability (HCSF), is responsible for the stability of the financial system. The Prudential Supervision and Regulation Authority (ACPR), an administrative authority attached to the Banque de France, also pursues this objective by supervising banks and insurers and protecting their customers. Amid persistent international tensions, the initiatives carried out contributed significantly to the resilience of the French financial system.
1. The French financial sector absorbed the shocks triggered by the war in Ukraine
A robust financial sector that swiftly adapted to the crisis
Effective implementation of European sanctions
In response to the war in Ukraine, the Banque de France offered its technical and operational expertise to help prepare and implement financial sanctions against Russia. It also took part in international discussions aimed at preventing any efforts to thwart the sanctions as well as their impacts on financial stability. As soon as the first sanctions were published, the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority) sent out a questionnaire to supervised institutions in order to identify the accounts and transactions involved, and measure any operational challenges encountered. The answers to the questionnaire showed that, aside from a few initial one-off problems, institutions were able to take on the resulting additional workload. On-site investigations were also conducted to make sure Russian assets were frozen as instructed.
The financial sector remained robust
With an average CET1 ratio of 14.9% at end-December 2022, the six main French banking groups maintained a substantial margin over the minimum regulatory capital requirement. Although the cost of risk rose due to the war in Ukraine and the worsening macroeconomic environment, it remained under control and was well below that observed during the health crisis. For their part, French insurers significantly exceeded their capital requirements and their capital has been increasing since the end of 2021, in line with the rise in interest rates.
A financial sector that fully played its role in response to the energy crisis
The war in Ukraine triggered a sharp rise in gas and electricity prices, also increasing their volatility. Given the risks posed to financial stability, the Banque de France and the ACPR stepped up their supervision of French institutional exposures to these markets.
The crucial role of banks as liquidity providers
In March and August 2022, price fluctuations spurred a peak in initial margins demanded by central counterparties (CCPs) to cover increased risks (see Focus below: "The role of CCPs"). French non-financial corporations exposed to derivative markets successfully weathered the associated liquidity tensions by drawing on liquidity provided by banks. French banks, which are particularly active in the energy derivatives market in Europe, play a key role as intermediaries between their customers and the clearing houses. They demonstrated a significant capacity to absorb shocks and remained resilient, with overall exposures to the energy sector contained in relation to their total capital.
Enhanced surveillance to address heightened cyber risk
A real threat
The conditions created by the war in Ukraine proved particularly conducive to the advent of potentially destabilising cyberattacks. The acceleration of the digitalisation of the financial sector has generated vulnerabilities that could be exploited by hackers. Pirating methods are becoming increasingly sophisticated and pose an ever-greater threat to all sectors.
Necessary enhancement of resilience in response to cyberattacks
The Banque de France and the ACPR took a proactive approach to implementing the EU’s Digital Operational Resilience Act (DORA). DORA harmonises requirements applicable to all financial institutions and innovates by introducing direct supervision of “critical” third-party providers. Both institutions are extensively involved in multiple working groups and coordination systems in France (such as the Paris Resilience Group, chaired by the Banque de France, which mobilised 1,700 Paris financial market professionals), in Europe and at the international level.
Cross-border cooperation is critical in order to curb systemically hazardous cyber crises. After the G7 successfully carried out its first major cyberattack simulation in 2019, the Banque de France and the ACPR continuously worked to bolster their international cyber resilience partnerships, organising a joint cyber crisis management test with the Monetary Authority of Singapore in June 2022. In January 2022, the European Systemic Risk Board (ESRB) called for the creation of a pan-European systemic cyber incident coordination framework aimed at better combating cyberattacks targeting the financial system.
2. Macroeconomic and financial uncertainties call for continued vigilance
Monitoring vulnerabilities associated with the financial markets and financing conditions
Strong volatility on the financial markets
In 2022, the financial markets were beset with strong volatility, in response to rising interest rates in an uncertain environment marked by constantly climbing inflation, the normalisation of monetary policies and an economic downturn. Increasing sovereign debt yields were accompanied by shrinking liquidity, but the market continued to function smoothly and risks of European sovereign debt fragmentation were contained. Corporate bond issuance waned, particularly for high-yield issuers (presenting a greater risk of payment default), and was offset by an upturn in bank loans, the cost of which rose less quickly than the cost of market debt. Equity markets experienced substantial corrections, reflecting the impact of rising risk-free rates on valuations. They could see further adjustments, given the slowdown in growth and earnings prospects.
Non-banking financial intermediaries are a source of risks
These major fluctuations have thus far arisen in an orderly fashion, but isolated tensions have appeared, particularly on the UK sovereign debt market. This episode of stress underscores the risk represented by non-banking financial intermediaries exposed to leverage (investing by taking on debt, which generates risk). Their liquidity requirements can amplify adverse market volatility, with the potential for systemic destabilisation. Available data indicate that the level of leverage of French investment funds is under control. However, contagion triggered by stress caused by less resilient non-resident entities cannot be ruled out. The Banque de France works with the Financial Stability Board (FSB) to analyse the vulnerabilities of non-banking intermediaries. It supports the development of regulatory responses aimed at better addressing their risk and increasing transparency on their exposures.
Monitoring the impact of rising inflation and interest rates
The situation of non-financial agents was stable
Despite a high level of debt compared with their European and international counterparts, French non-financial corporations and households enjoy limited exposure to interest rate risk thanks to their predominantly fixed-rate debt. The repayment capacity of companies was bolstered by their high level of activity and low default rate. As regards households, the improvement in credit standards for housing loans proves the merit of France's financing model for house purchases, which is based on the borrower’s repayment capacity and should not be affected by changes in the residential housing market, where prices are continuing to climb. The creditworthiness of the French government remained strong, but the debt path was weakened by measures to offset high energy prices, as well as by the deteriorating macroeconomic outlook and rising interest rates.
Banks and insurance firms are sound, but caution is necessary
Banks displayed a robust balance sheet structure and continued strong earnings, which should be underpinned in the medium term by an increase in net interest income (see Focus below: "Interest rate risk for banks and insurance firms"). Cost of risk remained on the low side, but the Banque de France and the ACPR are calling for conservative provisioning policies due to the uncertainty weighing on the credit risk outlook. Insurance firms also enjoy a high level of capital, allowing them to absorb the impact of rising inflation and interest rates (which vary depending on firms’ activities).
New macroprudential measures in response to strong lending dynamics and heightened cyclical risks
Ensuring housing debt remains sustainable
The HCSF set out credit standards for housing loans in a recommendation issued in 2019, which became legally binding in January 2022 on the proposal of the Governor of the Banque de France. The Bank has now capped the maximum debt-service-to-income ratio at 35% for a maturity of no more than 25 years. Credit institutions can deviate from these criteria with a flexibility margin of up to 20% of the amount of new quarterly issued housing loans. By ensuring that the household repayment burden is not excessive, this measure helps improve the sustainability of their debt. As a result, lending has become more secure, with a significant decrease in the share of loans exceeding these thresholds, without adversely affecting the momentum of housing loans, which remained robust in 2022.
Anticipating cyclical risks
The HCSF began rebuilding the credit protection reserve (countercyclical capital buffer1) after the Covid 19 crisis, which had led to it being reduced. Despite economic and geopolitical uncertainties, lending continued to grow sharply in 2022, while debt levels were already high. Given the persistence of vulnerabilities and the level of risks, the HCSF decided to increase the buffer to 0.5% in March 2022, then to 1% in December 2022, with a 12-month implementation deadline. It is not planning on an additional hike in 2023. The countercyclical capital buffer is designed to be relaxed immediately if required in order to combat risk and shore up the long-term supply of credit to the real economy. The HCSF also maintained the exposure limits of systemically important banks to highly leveraged French large companies.
3. The Banque de France and the ACPR are assisting with structural changes to the financial system
Regulating the digitalisation of finance
A bumpy road for the crypto-assets market
After growing sharply in 2020 and 2021, the size of the crypto-assets market fell almost threefold compared with its peak in November 2021, dropping to USD 800 billion in market capitalisation at end-2022. Amid uncertain economic and geopolitical conditions, investors elected to reduce their exposure to these high-risk assets. Several incidents, including the collapse of the blockchain protocol Terra and the fraud-related failure of crytpo conglomerate FTX, exacerbated this decline. These chaotic events demonstrate the relevance of warning messages issued by the authorities. At this stage, the crypto-assets market does not appear to present a systemic risk, due to its small size (relatively limited, at around 1% of global market capitalisation) and its weak overlap with traditional finance. That said, the lack of reliable data and expansion of contagion channels call for a cautious approach. This is why the Banque de France promotes internationally coordinated regulation, founded on the “same activity, same risk, same regulation” principle.
Welcome European regulation
The European Union, a pioneer in this area, plans to adopt an initial regulatory text on crypto-assets in 2023, stemming from a political agreement obtained under the French presidency of the EU Council, with an entry into force scheduled for the second quarter of 2023.
The Markets in Crypto-Assets (MiCA) regulation should take effect in the second quarter of 2024 for covered crypto-assets (backed by a traditional currency for example), referred to as stablecoins, and in late 2024 for crypto-asset service providers. The MiCA regulation introduces a harmonised framework for crypto-asset issuers and service providers. The extensive involvement of the Banque de France and the ACPR in negotiations helped ensure that a balanced compromise was reached. MiCA does not cover certain segments of the crypto-assets sector, however, such as decentralised finance (DeFi) and non-fungible tokens (NFTs), set to be addressed in dedicated reports by the European Commission and subject to legislative proposals where applicable.
In addition to its efforts to regulate crypto-assets, the Eurosystem is continuing its work on a central bank digital currency (CBDC). The investigation phase of the digital euro, launched in October 2021, led to the definition of project targets and guidelines on certain design features (described in the Monetary Strategy chapter).
The global challenge of the climate transition
A climate transition requiring support
The rise in energy prices has highlighted the strong dependence of European economies on fossil fuels. Unfortunately, short-term measures aimed at reducing dependence on Russian gas mean using even more fossil fuels. As a result, the climate transition may be pushed back due to the current energy crisis, raising the likelihood of a “disorderly transition” (difficulty in achieving the goals of the Paris Agreement).
The Banque de France and the ACPR have sharpened their focus on climate change risks. In the euro area, the Single Supervisory Mechanism (SSM), to which the ACPR contributes, conducted a test in 2022 that underscored the need for banks to ramp up their efforts to develop their climate stress test framework. The European Insurance and Occupational Pensions Authority (EIOPA) also completed its first climate stress test in 2022, measuring the impact of a disorderly transition on the balance sheets of supplementary occupational pension institutions. For its part, the ACPR continued working with insurance firms to prepare the next climate stress test, in the wake of the pilot test conducted in 2020-21.
Non financial information: a tool for recharting a course towards more sustainable investments
In 2022, the ACPR began exercising its role in supervising environmental, social and governance (ESG) information published by financial institutions, in accordance with European and French regulations. The aim of these regulations is to redirect capital flows towards sustainable economic activities by improving the information provided to investors on the ESG characteristics of investment vehicles. In a bid to strengthen the quality of these publications, the Banque de France resolutely supports the adoption of European and international standards with the goal of expanding and harmonising the ESG information disclosed by non-financial companies.
4. Supervision of market practices to protect customers
As part of its mission to protect the customers of banks and insurance firms, the ACPR ensures that business practices duly incorporate customer interests. Inspections continued in 2022 on the marketing of life insurance contracts and fees charged to investors, compliance with caps on bank fees charged to customers for account operation incidents, and the freedom to choose payment protection insurance for housing loans. The ACPR also focused on the regulatory compliance of advertising documents (with a recommendation pertaining to sustainable finance arguments), the quality of precontractual information (particularly in the case of unsolicited marketing), the consumer loan approval process, and payments in instalments (sharply on the rise).
Working alongside the Autorité des marchés financiers (AMF – Financial Markets Authority), the ACPR continued to investigate the marketing of financial products to vulnerable elderly persons. The website Assurance Banque Épargne Info Service (ABEIS, abe infoservice.fr – more than 2 million pages viewed in 2022) and the telephone hotline provide the general public with information and practical and neutral advice on financial products, as well as scams and financial sector professional identity theft (which was on the rise again in 2022). The authorities ended up blacklisting more than 1,135 names of unauthorised sites or parties.
The role of CCPs
Central counterparties (CCPs) contribute to financial stability by managing the counterparty risk of participants and limiting their liquidity requirements by clearing their transactions. A CCP effectively becomes the buyer for each seller and the seller for each buyer, thus ensuring that the participants’ transactions are smoothly processed. To hedge the credit risk taken on for each participant, the CCP collects pre-financed resources, including initial margins, variation margins and a pooled default fund.
Given the stabilising role played by CCPs during the 2008 crisis, the G20 called for clearing to play a stronger role in the roadmap adopted at the 2009 Pittsburgh Summit.
The March 2020 shock triggered by the Covid-19 crisis and then the 2022 energy crisis have underscored the need for CCPs to better address the vulnerabilities of market participants and the potential procyclical effect of margin calls. For example, the volatility of commodity prices sparked a sharp rise in initial margins, which may have encouraged certain market participants to switch to OTC markets. This trend has heightened counterparty risk and reduced the transparency of market transactions.
Multiple reviews were launched as a result and are still in progress. On the international stage, in September 2022 the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI) and the International Organisation of Securities Commissions (IOSCO) published a joint Review of Margining Practices that identified six areas for further policy work, such as evaluating the responsiveness of non-centrally cleared IM models to market stresses. At the European level, in June 2020 the European Systemic Risk Board (ESRB) issued recommendations aimed at governing procyclical CCP practices.
Interest rate risk for banks and insurance firms
French banks and insurers are expected to benefit from rising interest rates in the medium term.
In the coming quarters, banks should enjoy a positive impact from orderly interest rate hikes on their net interest income, thanks to the predominance of non-interest-bearing or fixed-rate liabilities on their balance sheets. For a 200 basis-point shock, the net interest income of banks should increase by 15% on average, with significant disparities depending on the institution. In the short term, however, the cost of deposits is set to climb faster than the return earned on assets.
For insurance firms, the consequences of rising interest rates and inflation vary depending on their activities. Non-life insurers offering long-term guarantees are more vulnerable to the effects of inflation on the cost of claims. Rising interest rates expose life insurers to the risk of policy surrenders by insured parties, which were nevertheless limited and offset by positive inflows in 2022. A gradual rise in interest rates will allow insurers to reinvest their prior investments at maturity in more lucrative assets.
3. Services to the economy and society
- Support and guide companies, especially the smallest ones:
- support for VSEs and SMEs
- credit mediation
- Serve individuals, in particular the most vulnerable:
- assistance with overindebtedness, right to a bank account
- database management, control of bank fees
- Promote understanding of the economy and better management of personal finances:
- implementation of France’s economic and financial education strategy, which the Banque de France is responsible for executing
- major initiatives and partnerships, including with the Ministry for National Education and Youth
- Provide financial services for the state:
- holding the French Treasury's bank account
- managing government debt auctions
2022 in pictures
- 10 March: Second annual spring event for start-ups at Citéco (Cité de l’Économie).
- 22 April: Signature of an amendment to the public service contract of 17 February 2012 between the Banque de France and the government.
- 22 June: Publication of the 2021 annual report of the Observatory for Banking Inclusion.
- 24 June: Publication of the 2021 annual report of the Trade Credit Observatory.
- September: Signature of four partnership agreements between the National Credit Mediation body and organisations involved in dealing with business difficulties.
- 10 October: First Business Forum, which was attended by 450 people from the world of entrepreneurship, including business leaders, representatives from professional networks, institutions and Banque de France employees.
- 24 October: : 3414 – inauguration of a one-stop helpline for consumers to connect with the Banque de France's services.
- 15 and 17 November: : Participation in the Journées de l’économie (JÉCO) conference in Lyon, which addressed the topic of “Economic bifurcation: what lies ahead?”
bank accounts opened under the right to a bank account procedure
referrals to our 102 VSE-SME correspondents
The Banque de France, a local partner for households and businesses
The Banque de France is a public institution with a nationwide presence through its branch network. This enables it to deliver a high-quality public service to households and companies around the country and to address their needs in a challenging economic environment. The Banque de France is also a provider of financial services to the state and the European Union.
1. The Banque de France is expanding and enhancing its business services
Enhanced expertise to serve companies
A new and more accurate rating scale
On 8 January 2022, the Banque de France modified its rating scale to assess the financial health of rated companies more accurately. The scale also reflects adjustments to the rating methodology to meet European requirements for external credit assessment institutions, aimed at evaluating companies’ risks more effectively as well as their capacity to deal with such risks.
The rating, which has been expanded to include additional indicators and financial analysis ratios, is now more detailed, with 22 risk levels, compared with 13 previously, in accordance with new European credit risk assessment standards. The refined rating system will help to improve the resilience of the financial system and the quality of financing provided to the economy.
Recognition of climate-related risks
The Banque de France continued work aimed at better capturing the exposure of companies to climate risks when assessing their performance. As they ready themselves for the low-carbon transition, firms are adapting their business models and getting organised to meet market requirements. At the request of regulators, they are going to have to publish a wide range of extra-financial disclosures, notably in connection with implementation of the Corporate Sustainability Reporting Directive (CSRD)2 which comes into effect at the end of 2024 for large companies.
Against this backdrop, in 2022 the Banque de France began in-house trials of a prototype climate indicator to measure the progress made by companies in the low-carbon transition. A partnership was signed with the French Environment and Energy Management Agency (ADEME) in March 2022 to apply some of the core elements of the agency’s Assessing low-Carbon Transition (ACT) methodology to the development of tools to assess company transition trajectories.
New business support tools
A personal space for senior company managers on the Banque de France website
In 2022, the Banque de France began the process of creating a personal space for senior company managers, which will be available in 2023. The new space will act as a one-stop gateway to a suite of services aimed specifically at company managers. Using their secure login, any legal representative of a company will be able to access their firm's rating, his or her management indicator,3 any business-related correspondence and online business positioning and analysis (OPALE) reports. Representatives can also see key indicators for their companies and compare them against those of their industry. The tool will provide a new channel to connect with the Banque de France, as managers will be able to submit questions via the personal space. It is the result of a participative approach (surveys and individual interviews with a panel of managers) that will be continued in 2023.
OPALE, an enhanced assessment tool for businesses
In early 2022, substantial changes were made to the online financial assessment service (OPALE) provided free of charge to company managers. Ten or so additional ratios and aggregates were added, with analyses made available to company leaders. OPALE’s two modules – Analysis and Simulation – give executives easy access to robust, instantly available financial expertise.
The analysis module allows them to measure and compare company performances and to identify strengths and room for improvement through four analytical themes. The simulation module is designed to prepare forward-looking scenarios to assess the financial impact of projects and management decisions, especially on cash flow. With OPALE, which they can use either on their own or with assistance, company managers have a handy tool to support decision-making and communication with financial partners.
ACSEL: supporting the regional economies
Last year saw the completion of several major “regional economy” projects aimed at enhancing the local economic cyclical and structural analyses (ACSEL) offered to local decision-makers. ACSEL studies can be used to examine the economic and financial situation of a given geographical area, sector of activity or set of companies. By applying artificial intelligence tools to the 1,254 établissements publics de coopération intercommunale (EPCI – public inter-municipal cooperation structures), which include major cities as well as groupings formed from smaller communities, and harnessing socio-economic criteria, four regional profiles were created, offering new scope for drawing comparisons.
New indicators were also added to measure regional performances against not just the national average but also “expected” performance levels, the exposure of a given sector to globalisation, or the functioning of the local labour market. These innovations, which enhance the Banque de France's financial expertise, were added to one of the ACSEL modules in November 2022.
Initiatives to serve businesses locally
Supporting VSEs and SMEs through a nationwide presence
Over the past six years, the Banque de France has provided support to more than 38,000 project leaders and company managers. In 2022, 8,779 entrepreneurs were assisted by the Bank's 102 department-based VSE-SME correspondents, whose task is to field questions from entrepreneurs during their business journey and to quickly assess their company’s situation, in order to steer them towards the right correspondents. The service is free and confidential (see Focus below: "Payment times: a year of raising awareness among companies").
Strengthening support for innovation with start-up correspondents
In 2020, the Banque de France deployed a network of start-up correspondents in every region and in each “French Tech Capital”, with the aim of supporting and rating these firms while taking into account the specific features of the start-up growth model. The number of start-ups identified and rated by the Banque de France has more than doubled in the space of three years (around 2,000 balance sheets rated in 2022), creating the need to train specialised analysts and contact persons to deliver broader regional coverage. Around 1,000 start-ups were assisted in their efforts to obtain financing. The Bank published a study on their financial situation4 which underlined the vibrant growth of French Tech.
Credit mediation still working to help businesses
In 2022, applications for mediation (2,180 cases) fell by 45% compared with 2021. Reduced demand, at a time when companies are showing good overall resilience, is also a sign of favourable access to credit.
A small number of these applications (598) concerned restructurings of state-guaranteed loans (SGLs), in accordance with the industry agreement of 19 January 2022.
The vast majority of applications (78%) came from very small enterprises (VSEs, fewer than 11 employees) operating in the services sector (52%) and, to a lesser extent, in trade (22%) and construction (13%).
Interventions by department-based mediators supported 860 companies and saved 10,232 jobs across the country.
In the context of macroeconomic uncertainty, the mediation scheme developed new partnerships with organisations involved in identifying and resolving business difficulties, such as the Centre national d’information sur la prévention des difficultés des entreprises (CIP – National Centre for Information on the Prevention of Business Difficulties), the Conseil national des greffiers des tribunaux de commerce (CNG – National Council of Commercial Court Registrars) and La Clinique de la Crise (crisis support network), among others.
2. The Banque de France continued its work to promote financial inclusion
A simpler and stronger multi-channel system to communicate with the public
Launched in 2016, efforts to upgrade and streamline the channels through which members of the public can communicate with the Banque de France are continuing, with the aim of making the institution accessible to everyone, especially the most vulnerable.
Since October 2022, Banque de France employees have staffed a one-stop helpline number, 3414, which replaced more than 200 existing numbers. For the cost of a local call, members of the public can use this helpline from 8 a.m. to 6 p.m. to reach the most appropriate department for the subject of the call.
Anyone wishing to use the Banque de France's services may do so through the channel of their choice, including via its website, which had approximately 270,000 open accounts at end-2022, or at the Bank’s branches, where meetings are primarily by appointment.
An objective of preventing financial difficulties
The incident databases managed by the Banque de France, including the Fichier central des chèques (FCC – Central Cheque Register) and the Fichier national de remboursement des crédits aux particuliers (FICP – National Register of Household Credit Repayment Incidents), aim to prevent financial difficulties and overindebtedness. Banks use them in their loan approval processes and to identify customers who are struggling financially. In 2022, the number of incidents reported to the FICP was on a par with that of 2019, while the number of reports to the FCC was more or less the same as in 2021.
A major role in dealing with excess debt situations
Banque de France staff provide the secretariat for the departmental Household Debt Commissions, manage the procedure for dealing with cases of household overindebtedness and implement solutions to assist households to get out of difficult financial situations. They meet with individuals, assess their applications, contact creditors and propose solutions to the Household Debt Commissions, which then make their decisions. Since May 2022, France’s Loi en faveur de l’activité professionnelle indépendante (API – Self-employed Professional Activity Act) has opened up the procedure to sole proprietors, but only upon a referral to a judge ruling on commercial matters.
This free system ensures, as soon as the application is accepted, protective measures for the debtor (suspension of enforcement procedures, interest and repayments, prohibition of rejection fees, restoration of housing benefits, etc.).
The number of applications submitted fell from 120,975 in 2021 to 113,081 in 2022, which is close to pre-pandemic levels, although the number of monthly applications stabilised as of August. Information on the activity of the Household Debt Commissions can be found in the financial inclusion barometer and in Appendix 6.
Work by the Observatory for Banking Inclusion
The members of the Observatoire de l’inclusion bancaire (OIB – Observatory for Banking Inclusion) held two plenary meetings in 2022 but also continued to share their views on social conditions each month. The observatory provides a forum for banks and structures providing assistance to jointly monitor developments in the situation of households by analysing bank account-related incidents and the take-up of different schemes (see Focus below: "Financial inclusion councils set up across the country").
Improved detection of vulnerabilities, first noted in 2021 following the entry into force of measures recommended by the Observatory, continued. More than four million people are currently identified as vulnerable, but over six million people are actually eligible to have their fees capped, thanks to improved detection and the inclusion of situations of temporary vulnerability.
Efforts to deploy the special scheme for vulnerable customers continued and helped over 800,000 people at end-2022.
3. The Banque de France, steering body for the national strategy for economic, budgetary and financial literacy (EDUCFI)
The Banque de France is in charge of executing the EDUCFI strategy nationwide, alongside 29 partners from the public, non-profit and private sectors. In line with criteria set down by the Organisation for Economic Cooperation and Development (OECD), which state that financial literacy information should be unbiased, reliable, accessible and free of charge, it aims to ensure that everyone has access to a useful framework for making financial decisions.
Economic, budgetary and financial literacy training for young people
EDUCFI passports, which are issued to third and fourth-year secondary school students who have completed a financial literacy course, are becoming more widespread. Designed to convey a basic introduction to budgetary and financial topics, the scheme was delivered by educators to 2,200 third and fourth-year classes in 2021-22, or 80,000 students. In 2022-23, all secondary schools will teach the passport training course to at least two of their third-year classes, raising awareness among 400,000 students, or about half the total number of students at that level.
The Banque de France and its partners also staged EDUCFI workshops for 31,000 volunteers from the National Universal Service programme. The goal in 2023 is to reach 45,000 young people.
Tackling monetary and financial issues, the ABC de l’économie collection offers more than 90 educational resources to members of the public, secondary and post-secondary students and educators.
The Banque de France has also teamed up with the Ministry for National Education and Youth to run two high-school competitions: the Prize for Economic Excellence in Science and Management Technologies, in partnership with Citéco (see Focus below: "Citéco: delivering a diverse line-up of educational services") and IEDOM-IEOM (3,450 participants in 2021-22), and the Generation €uro competition with the European Central Bank (700 participants).
Fostering better public understanding of budgetary and financial challenges, especially among the most vulnerable members of society
Around 650 EDUCFI workshops were organised for 5,300 young people enrolled in employment integration programmes at over 200 organisations, including local youth guidance centres, second-chance schools, Apprentis d’Auteuil, an organisation that helps disadvantaged youth, and the public employment service, along with 114 workshops for 1,200 people with literacy difficulties and their support persons during the events staged as part of France’s national illiteracy prevention campaign.
New training programmes are being made available to social actors on scams and online banking. In addition, measures tailored to social services (hospitals, correctional facilities, national defence) are being carried out to address best practices in management of personal finances and financial inclusion.
Helping entrepreneurs, particularly more isolated ones, to gain a better grasp of companies’ financial management challenges
The EDUCFI awareness-raising programme for entrepreneurs is expanding, notably to include the public employment service and business incubators, with videos and modules on topics such as the balance sheet, equity, equity financing and bank/business relationships.
Spreading EDUCFI messages through broader channels
Under the EDUCFI strategy, the Banque de France manages the websites: ABC de l’économie, Mes questions d’argent and Mes questions d’entrepreneur. In addition to many podcasts, it offers free educational content on social media, including all of its educational videos and webseries on the Educfi Banque de France YouTube channel. At the end of 2022, these digital services were expanded to include educational digital games, such as Scènes d’argent, a narrative game, and a digital version of the # Aventure Entrepreneur game.
4. The Banque de France provides financial services to the state and to Europe
Management of the Treasury’s accounts
At the government's request, the Bank manages the Treasury's accounts and associated payments (see Focus below: "Banking services provided to the Treasury" and "Execution of the public service contract in 2022").
Auctions of securities issued by the European Commission
To finance the NextGenerationEU recovery plan adopted on 17 September 2020,5 with an amount of EUR 800 billion up to 2026, the European Commission decided to issue securities through an auction system. Following its selection by the Commission in 2021, the Banque de France auctioned Commission securities worth a total of EUR 85.1 billion (in 32 auctions) in 2022. Thanks to its automated auction system, the Banque de France provides the Commission with the technical support and expertise it needs to raise funds rapidly and at low cost.
Payment times: a year of raising awareness among companies
Whereas France’s 2008 Law on the Modernisation of the Economy (LME) spurred a significant decrease in payment times, the situation has ceased to improve over recent years and has actually deteriorated at large enterprises (LEs) and intermediate-sized enterprises (ISEs). Responding to this, the Banque de France launched a campaign to raise awareness among the different stakeholders – but especially companies – about long payment times.
In 2022, with the introduction of the new rating scale, Banque de France ratings now capture payment behaviours more effectively. The scale's qualitative analysis considers the presence of excessive payment times by financially healthy companies that have themselves received payment in a timely fashion. For this first year, the goal was to raise awareness among companies during rating interviews and to underline the need to comply with payment time stipulations and best practices, while discussing topics such as:
- intragroup transactions and transactions outside the European Union, which are not necessarily regulated and may enjoy complete freedom of contract;
- the importance of invoices not yet received, stressing the role of accountants in receiving invoices and identifying the reasons for any delays, e.g. complexity of the supplier/client information system, dispute over the service provided, conflicts, etc.;
- the period between the date when the invoice was issued and payment (number of approvers, frequency with which their list is updated, approval stages, frequency of payment, etc.).
Targeted companies included ISEs and LEs in excellent financial health. At the end of the 2022 rating campaign, just under 10% of them were downgraded by one notch relative to a situation without excessive payment times.
This conclusive trial will be rolled out on a full-scale basis in 2023 and will also be expanded to include subsidiaries of small and medium-sized enterprises (SMEs) as defined by the LME.
Financial inclusion councils set up across the country
After being trialled in 20 or so departments in 2021, financial inclusion councils (CDIFs) have now been set up throughout metropolitan France. Coordinated by a financial inclusion correspondent, these councils, which meet every six months, bring together local representatives of banks, social and budget assistance organisations and public authorities. The councils play a key grassroots role, helping to understand current social conditions, enhance the work of the Observatory for Banking Inclusion, and share insights and effective initiatives.
Praising the benefits of the new councils, CDIF participants nationwide agreed that this new forum for dialogue and cooperation would foster a collective approach to financial inclusion by leveraging the expertise and complementary skillsets of individual members.
Several councils did mapping work to identify local financial inclusion actors. Meanwhile, all of them underlined the major ongoing need for information and education on the various available schemes, including the right to a bank account, the special scheme for vulnerable customers, and microcredit. On the topic of microcredit, which was put specifically on the agenda of the CDIFs’ autumn meetings, the need to identify competent local talking partners was highlighted as being particularly important to supporting wider distribution.
Enhanced with department-level data on financial inclusion, discussions were also used to update the councils’ shared assessment and maintain a close watch on the financial situations of households.
Citéco: delivering a diverse line-up of educational services
Visitors to the museum can enjoy guided “discovery” tours. During their visit, they can connect with one of the museum’s facilitators, who are on hand to chat with those looking to delve deeper into specific economic topics.
School groups can take advantage of guided tours on a range of themes (currency, globalisation, sustainable development). By signing up for a tour/workshop combo, visitors can extend their guided tour by trying out an immersive game exploring how international trade or markets work.
The museum's diverse programme of cultural events offers an interactive and holistic way to gain a better understanding of economics and includes evening visits, screenings, shows (such as Surfeurs de l’économie, which explores the history of economic thought through the ages) and lectures by economic specialists.
Educational resources on citeco.fr and YouTube
The citeco.fr website offers over 200 educational resources including articles, videos, interviews with experts, interactive games and multimedia products. A space for educators links these resources to official school syllabuses for classroom use.
The T’as capté? webseries co-produced with the Banque de France offers a light-hearted and simple introduction to economic issues. Geared to high-school students, it targets different sections of school syllabuses.
The Qui s’en bat l’éco? webseries, which is for the general public, is Citéco's popular economics video series. Using YouTube conventions, it offers playful and educational insights into economics-related themes, from Brexit and crowdfunding to corporate sponsorship. The series won the bronze medal in the Stratégie 2022 Awards in the WebFilm, WebTV and Webdocumentary category.
Banking services provided to the Treasury
The Banque de France provides the Treasury with an IT system that is regularly updated to reflect its changing needs and those of the financial centre as well, as the modernisation of payment instruments. The system allows the Treasury to manage its cash flow and to carry out all its banking transactions, including assistance payments to the economy, flows of funds to local communities and public institutions, tax-related payments, payroll for government employees and more. The online bank service (BDF Direct), whose roll-out gathered pace in 2022, allows accountants to manage their transactions and accounts in real time.
For the management and settlement of these flows, the Banque de France represents the government in retail interbank payment systems (STET for France and STEP2 for European cross‑border transactions) and high‑value payment systems (TARGET2), as a direct participant.
In 2022, the single Treasury account, held at the Bank, handled nearly 909 million payment transactions initiated and received by public accountants through 2,615 transaction accounts.
Agence France Trésor (AFT), which manages the government’s cash balances, can therefore supervise the government’s financial flows on a daily basis and ensure that it always has sufficient resources to meet its financial commitments. Article 123 of the Treaty on the Functioning of the European Union prohibits euro area central banks from granting credit facilities to public bodies. The Treasury’s single account at the Banque de France must therefore be in credit at the end of each day.
On behalf of Agence France Trésor (AFT), the Banque de France holds auctions of government securities (OAT and OATi bonds6). These auctions raised EUR 585.8 billion in 2022.
Execution of the public service contract in 2022
The public service contract between the Banque de France and the government sets out execution procedures for the activities carried out by the Banque de France that warrant its permanent presence around the country. The contract was amended in 2022 to update a number of legal and regulatory references, to take account of recent changes at the Bank, and to update the list of activities covered by the contract.
Under the contract, the Banque de France’s branch network is responsible for receiving members of the public and providing them with information on issues concerning overindebtedness, payment incident registers, the right to a bank account, and bank transactions and practices. In 2022, the network responded to 1.33 million requests from individuals, including 307,680 requests received at its branches or reception and information desks. The network also handled 555,160 phone calls and answered 130,770 emails and letters. The Bank is continuing to modernise the way in which it serves the users of its services, and also received 336,650 requests submitted via the personal spaces on the website. The network's experts took part in around 1,800 meetings of different bodies set up by the government in the framework of its economic activities.
4. Transformation strategy
Building 2024 Together
extended challenges: inflation, climate change, financial stability, technological change, social and local issues, employer attractiveness
responses: 1/Anchor price stability, the climate transition, financial stability and resilience 2/Anticipate innovation 3/Accompany individuals and businesses 4/Attract and retain talent
10 key results targets
- 74% have confidence in the euro, 35% have confidence in the ECB (results of the summer 2022 survey) - Target: Maintain or increase French people’s confidence in the euro and the ECB
- 15 counterfeit banknotes per million banknotes in circulation in 2022, EUR 605 million of cashless payment fraud in first half 2022 - Target: Increase the security of payment instruments: fewer than 20 counterfeit notes per million banknotes in circulation in 2024; cashless payment fraud reduced to under EUR 1 billion by 2024
- 26 large French banks and insurers published their exposure to climate risks in 2022 - Target: 20
- 9 million pageviews for financial education resources - Target: 6 million per year
- 3.8 million people provided with information or guidance on financial inclusion in 2022 - Target: 4 million
- 88% of customers satisfied with Banque de France services 2022 - Target: 90%
- 22.6 % reduction in greenhouse gas emissions compared with 2019 - Target: Reduction of at least 15% over five years (provisional 2022 figure, partly estimated)
- 62% of staff have confidence in the Banque de France’s future - Target: 60%
- 64% of internal users satisfied with our IT tools, 39% satisfied with simplified methods - Target: Increase user satisfaction (70% for IT tools and 40% for simplified methods)
- 295 internal promotions since the launch of the plan - Target: 400 by 2024
3 targets for our resources:
- EUR 836 million: forecast net expenditure of our activities in 2022 - Target: Stabilisation (≤ EUR 912 million per year)
- 915 new hires over 2 years - Target: Over 1,200 new hires by 2024
- EUR 341 million of investment since 2021 - Target: Up to EUR 800 million over the duration of the plan
Overall satisfaction score in the 2022 survey on our service quality (7.8 in 2021)
of customers say they are satisfied (87% in 2021)
of those surveyed think the Banque de France provides an objective and reliable service (94% in 2021)
of those surveyed think the Banque de France knows how to evolve and innovate to meet the needs and demands of economic and financial agents (84% in 2021)
of those surveyed think the Banque de France is open and communicates sufficiently (73% in 2021)
Modernising the Banque de France and meeting new challenges
Midway through its Building 2024 Together strategic plan, the Banque de France remains an independent institution that is recognised for its expertise. Even as it faces new challenges, it wants to maintain its high standard of service for the economy and society, while at the same time continuing to modernise.
1. Building 2024 Together: midway review
The start of the roll-out of the strategic plan was marked by the Covid-19 pandemic, which triggered an abrupt and deep economic crisis. Initially, the plan was built around six major challenges (economic, monetary and European challenges, financial stability, climate change, technological change, social and local issues, and employer attractiveness).
In 2022, the Bank conducted a midway review of the plan to assess its relevance in light of the new challenges thrown up by the pandemic and the war in Ukraine. More than ever, Building 2024 Together reflects the Banque de France’s ability to adapt and innovate, for the benefit of all French citizens.
The midway review was structured around three main themes: the meaning of our action, new working methods – notably with the rise of teleworking – and how to better manage our resources.
The meaning of our action
Adopting a monetary policy to bring inflation down towards 2% and managing the effects of higher policy rates on central bank earnings have become key challenges in today’s environment. As a result, the strategic plan has been extended to include this inflation target of "towards 2%" by end-2024/end-2025. In parallel, the Banque de France is structuring itself to take better account of the development of decentralised and tokenised finance.7 The three actions in the plan relating to payment instruments have been reorganised and combined into two actions, which include the digital euro: innovate in everyday payments (Actions 4 and 5), and prepare our market infrastructures for decentralised and tokenised finance (Action 6). The strategic plan action on the governance and exploitation of data has been expanded with the addition of a fifth focus area: climate data. Last, the target of providing a climate indicator has been added to the action on incorporating climate risks into our company ratings.
New working methods, notably with the rise in teleworking
The public health crisis has profoundly changed the way work is organised. To take stock of the past two years, the Banque de France conducted a staff survey (45% participation rate) and held a series of interviews and workshops (with the participation of around 60 staff). The first positive finding was that the widespread adoption of teleworking has improved the quality of life at work and raised productivity. Teleworking is transforming work relationships by increasing trust and the use of targets to manage staff performance. However, one aspect that needs to be watched closely is the risk of a deterioration in team spirit. Teleworking can have a negative impact on relationships with colleagues, and on the integration and training of new staff. Individuals may also feel obliged to work from home (rather than coming in to an empty office) and may no longer feel that they are part of a team. The interviews also showed that managers have new expectations in terms of team leadership and management. Based on these findings, the Bank put together a set of proposals and good practices which it then disseminated to all staff. These ideas have been combined into a new action in the strategic plan: “strengthen our teamwork in a hybrid environment”.
Better management of our resources
The midway review was also an opportunity for the Bank to make sure that its resources are aligned with its targets.
In human resources, it aims to better publicise its strengths as an employer by expanding its range of communication tools and encouraging staff to act as company ambassadors. It also intends to speed up its recruitment process to attract the best candidates, including for internships and work-study contracts.
Regarding the Banque de France’s financial resources, the investment target for the duration of the plan remains unchanged at EUR 800 million. Budgets will be reviewed every six months to improve the management of investments and increase the Bank’s ability to respond to new needs. If necessary, some budgets will be reallocated to actions relating to energy efficiency and net zero.
Regarding IT resources, the Banque de France intends to strengthen its systems for measuring the use of its IT tools and staff’s digital autonomy. The amount of processing power made available will also be adjusted according to users’ needs (introduction of “IT scores”).
A strategy built around our 4A’s
The Building 2024 Together strategic plan provides four solid responses to our updated challenges (inflation, financial stability, climate change, technological change, social and local issues, employer attractiveness). These responses are summed up in four verbs: anchor, anticipate, accompany and attract.
The Banque de France is stepping up its action to keep prices stable by halting the channels of transmission of inflation and anchoring inflation expectations at the 2% target. It has reasserted its role as a pioneer in the fight against climate change, thanks to its involvement in the Network for Greening the Financial System (NGFS), and by incorporating climate risks into monetary policy and its company ratings. The Bank safeguards the stability of the financial system while also conducting preparedness exercises to ensure its operational resilience.
The Banque de France ensures it has the resources to anticipate the rapid changes in its environment. It is preparing for the issuance of a digital euro while also seeking to remain competitive in banknote manufacturing. It fosters innovation in all its core activities, and especially in enhanced supervision (“intrapreneurship” projects: SAM and DIXIT8). More broadly, it exploits internal and external data to better anticipate tomorrow’s changes.
The Banque de France is increasing its efforts to promote financial inclusion by rolling out a complete service offering for the financially vulnerable via its nationwide branch network (launch of the one-stop helpline number 3414). It is also helping entrepreneurs to weather the crises by extending its range of services and making it easier to contact an adviser (Manager Portal).
The Banque de France wants to remain an attractive employer and increase staff loyalty. It supports managers by providing dedicated training and disseminating good practices (Guide to Managerial Attitudes). It also seeks to match staff expectations with those of the business (launch of career management tools and the My Career app). It is simplifying operating methods by implementing 55 concrete staff proposals, such as the use of videoconferencing solutions or a simplified ordering system for office supplies.
Combining performance with capacity for action
In a less favourable monetary income environment,9 the Banque de France is managing its resources with the utmost care. Since 2015, it has paid significant sums to the French state (corporation tax and dividends totalling EUR 31 billion) while at the same time increasing its own reserves. It will therefore respond to the decline in its monetary income by reducing its payments to the state and drawing on a portion of its reserves. It intends to increase the number of new hires (around 300 per year) while at the same time lowering its net headcount by around 180 FTE (full-time equivalent) employees per year over the duration of the plan. The Bank has also set itself a target of stabilising its operating expenses (annual cap of EUR 912 million).
2. Progress on the Building 2024 Together plan
Launched at the start of 2021, Building 2024 Together has delivered its first encouraging results.
A focus on innovation in 2022
The Banque de France has made innovation one of its strategic priorities. It exploits the opportunities offered by new technologies, is speeding up its ability to experiment and roll out new solutions to the challenges faced by its departments, and is increasing its external visibility and influence.
The Banque de France’s innovation strategy, embodied by Le Lab, has two main strands:
- “Vertical” innovations led by individual Bank departments, with three priorities: security, exploitation of data and process digitalisation. The main examples of this are the experiments on a central bank digital currency (CBDC), the use of algorithms and data analysis tools to enhance the supervision of banks and insurers, and the robotisation of manual processes.
- “Horizontal” innovations which can benefit all departments. There are three main areas of horizontal innovation: post-quantum cryptography to increase security, artificial intelligence to improve the use of data, and blockchain, which could be used in various activities at the Bank.
Major advances in human resources
The Banque de France has reviewed its variable remuneration to better reward individual contributions and thereby motivate, attract and retain staff. It has also decided to give greater recognition to its expert staff, by offering them performance-related bonuses together with non-financial benefits such as training to maintain their expertise. In 2022, the Bank started recruiting assistant-level staff again, this time using a new testing system. The entrance exam has been reviewed to attract candidates with a more “generalist” profile, who have sound economic and financial knowledge and are suited to the Bank’s different missions. The single national exam has been replaced with six separate tests, one per geographical zone, all of which are held over the same period. This guarantees that successful candidates will be posted according to operational needs and in the geographical area of their choice. In addition to tenured staff, the Bank recruits staff on contracts. Since 1 January 2023, it has fully financed a compulsory income protection policy for all staff.
Le Lab Banque de France
Le Lab is the Banque de France’s innovation centre and its tool for anticipating change, exploring technology and constructing innovative solutions. Its mission is to foster and steer innovation in central banking activities by showcasing new use cases, technologies and approaches. Le Lab identifies technological trends, assists the departments with their innovations, provides a broad range of technical expertise, and steers the implementation of innovative projects. In 2022, it initiated some 20 experiments in conjunction with the Bank’s departments, focusing on the core areas of activity: finance and payments, supervision of banks and insurers, economic analysis and relationships with economic agents. It notably launched an experiment on collaborative methods to combat money laundering and terrorist financing (AML/CTF). Since late 2020, thanks to its blockchain expertise centre, Le Lab has also supported the programme of experiments on a wholesale central bank digital currency (CBDC) launched by the Banque de France. This work was singled out for an award at the May 2022 edition of IT’Night. Le Lab’s action plan for 2023 is to intensify its exploration and experimentation work in the Banque de France’s three business-wide focus areas: data exploitation, cybersecurity and the digitalisation of internal processes. The plan also includes collaborations with other central banks, start-ups, universities and innovactors. Le Lab participates in international cooperation initiatives on innovation issues – in particular in Paris with the Bank for International Settlements Innovation Hub (BISIH) Eurosystem Centre.
Creation of a network of “Shadow Boards”
At the end of 2017, at the suggestion of the Executive Committee, the Banque de France set up a shadow board called the Comité Perspectives Jeunes (CPJ – Young Prospects Board). The CPJ groups together recently recruited staff, mostly aged under 35, who are selected for their capacity to enlighten and challenge the Bank’s Executive Committee. Three CPJ sessions have already been held and the fourth should start in early 2023. To complement it, in October 2022, the Banque de France held an annual meeting of shadow boards at Le Lab, with the participation of seven firms and organisations. Its main objectives were to share good practices and experiences in setting up and operating a shadow board. A charter is currently being drawn up to turn this annual meeting into a “shadow board club”. The club will provide an opportunity to address shared problems, taking advantage of the expertise and approaches of each member organisation.
5. Corporate social and environmental responsibility
1. Acting to preserve the environment:
- Pilot and implement a carbon neutral strategy
- Engage the directorates and staff in reducing our carbon footprint
- Use our resources sustainably and help to the preserve biodiversity
2. Acting to foster HR inclusion and collaborative initiatives:
- Promote diversity in our hiring and guarantee equal treatment for all
- Guarantee career-long employability for staff
- Co-construct a working environment that fosters wellbeing and initiative-taking
3. Acting as corporate sponsor:
- Preserve and promote our cultural heritage
- Commit to increasing economic and social inclusion
- Promote the ecological transition and biodiversity
4. Acting for a sustainable economy, through our investments and procurement:
- Strengthen our responsible investment approach
- Incorporate extra-financial criteria into our operational investment project engagement and follow-up
- Continue and disseminate our responsible procurement approach
|AREAS OF ACTION...||OBJECTIVES||INDICATORS MONITORED||LEVEL OF ACHIEVEMENT 2022|
|Preserving the environment||
1. Pilot and implement a carbon-neutral strategy
2. Engage the directorates and staff in reducing our carbon footprint
3. Use our resources sustainably and help to the preserve biodiversity
No. 1 Reduce our greenhouse gas (GHG) emissions by at least 15% by 2024 (compared with 2019)
No. 1 Reduction in 2022 (compared with 2019): 22.6%a
|Fostering HR inclusion and collaborative initiatives||
1. Promote diversity in our hiring and guarantee equal treatment for all
2. Guarantee career-long employability for staff
3. Co-construct a working environment that fosters well-being and initiative-taking
No. 3 Percentage of women in managerial positions: 35% by the end of 2024
No. 3 Percentage of women in managerial positions: 35.6% at the end of 2022, exceeding the target set by the end of 2024 in the amendment to the company agreement
1. Preserve and promote our cultural heritage
2. Commit to increasing economic and social inclusion
3. Promote the ecological transition
No. 5 Annual rate of staff participation in solidarity initiatives
No. 5 Rate of participation in 2022: 29.7%
|Building a sustainable economy, through our investments and procurement||
1. Incorporate extra-financial criteria into our project engagement and follow-up
2. Continue and disseminate our responsible procurement approach
3. Strengthen our responsible investment approach
|No. 7 2°C alignment of the equity componentb of the pension liabilities portfolio||No. 7 1.5°C is the new alignment target following the achievement of the initial 2°C target in 2021 and 2022|
a Provisional figure for 2022, partly estimated.
b The Bank's responsible investment approach concerns the portfolios dedicated to equity and pension liabilities, assets for which it has full and complete responsibility. It is pursuing the objectives set by the Paris Agreement and intends to align the equity portion of its asset portfolios with a global warming trajectory of well below 2°C. To this end, it takes into account of the trajectories of companies’ carbon emissions in its investment choices, so that its portfolios comply with this target.
Pillar 1: Align investments with France's climate commitments
|OBJECTIVE 1||OBJECTIVE 2||OBJECTIVE 3|
By 2023, align the own funds portfolio and the European equity component of the pension liabilities investment portfolio with a trajectory compatible with global warming of less than 1.5°C by 2023, and then align the entire pension liabilities portfolio with this target by the end of 2025. The target was reinforced from 2°C to 1.5°C for 2023
Target of aligning both portfolios with a trajectory of less than 2°C reached again in 2022
Exclude issuers whose involvement in fossil fuels is higher than the thresholds set by the Paris-aligned benchmarks
Since 2021, issuers that generate over 2% of revenue from thermal coal or 10% from unconventional hydrocarbons are excluded. In January 2023, reinforcement of the exclusions already in place to 0% for coal, 10% for oil and 50% for gas by 2024, and addition of another exclusion for firms developing new fossil fuel exploration and extraction projects
Contribute to financing
As at 31 December 2022:
Pillar 2: Include environmental, social and governance (ESG) criteria in asset management
|OBJECTIVE 4||OBJECTIVE 5|
Exclude 20% of issuers based on ESG criteria (environment, social, governance), in accordance with the requirements of Pillar 3 of the Socially Responsible Investment (SRI) label
Objective reached in 2019
Contribute to financing social challenges by investing in impact funds and in sustainability and social bonds
As at 31 December 2022:
Pillar 3: Be an engaged investor
|OBJECTIVE 6||OBJECTIVE 7|
Apply a voting policy that includes extra-financial provisions and update it regularly
Policy adopted and implemented since 2019. In January 2023, change in the voting policy on executive remuneration (introduction of a cap on fixed remuneration)
Maintain a general meeting attendance rate of at least 80%
Footprint of the Banque de France's information system
Carbon footprint (in tCO2e)
Abiotic resource depletion (in kg Sb-eq. or antimony equivalent)
Displacement of raw materials (tonnes)
Acidification (in mol H+ eq. or hydrogen ion equivalent in soil and water)
Reference year: 2021
Scope of analysis focused on the supply of digital services (user environment, telephony/videoconferencing, printout, networks, data centres, infrastructure as a service – IaaS)
- Compliance with European Commission standards (PEF 3.0)
- Life Cycle Analysis (LCA) method
- Use of the NegaOctet reference database
- Multi-criteria analysis to avoid potential impact transfers
- Set targets and monitor how impacts change over time, in full transparency
- Identify sources of impacts and target our reduction measures
- Compile forecast and control the trajectory
Limit the footprint of our information system (IS) and aim for digital sobriety in all our uses
Our commitment: limit the impact of the growing use of our IS linked to the digitalisation of activities and new technologies, and thus contribute to the Bank's 2030 target of carbon neutrality
- Raise awareness and change digital practices
- Optimise our IT equipment
- Reduce the footprint of our data centres: HEQ (high environmental quality) and energy efficiency
- Reduce the impact of IT projects (incorporate digital sobriety criteria, performance indicators, eco-design, best practices and rationalisation of IT environments into their governance)
Charities that benefit from economic and social sponsorship (non-exhaustive list)
|Education||Social and professional inclusion||Microcredit|
Capital Filles, Coup de Pouce, Entreprendre pour Apprendre, Institut Télémaque, Apprentis d’Auteuil…
Emmaüs, Restos du Cœur, La Cravate Solidaire, Secours populaire français, La Croix-Rouge, ATD Quart Monde, Habitat et Humanisme…
Adie, France Active, Initiative France…
2022 in pictures
- 7 March: A concert in support of Ukraine; EUR 1 million donation to the Fondation de France, and double matching (Banque de France and Banque de France Social and Economic Committee) of employee donations (EUR 1 donated = EUR 3 paid), i.e. an additional amount of close to EUR 480,000 paid to the Foundation; Bank premises made accessible to Ukrainian families.
- 7 April: Amendment to the agreement on gender equality in the workplace.
- 14 June: First real estate operation in connection with the strategic action "Modernise the branch network premises and working environment" based on extra-financial analysis for the Angers pilot site.
- 27 June: The online training module on climate issues is made available to Bank staff.
- 20 September: Launch of the conference programme for the European Sustainable Development Week.
- 23 September: Adoption of the sustainable mobility package by the personnel committee.
- 26 September: Climate Fresk workshops and availability of the online training module on carbon neutrality.
- 18-19 October: Awareness-raising and mobilisation of operational players on the tertiary decree and energy sobriety.
- 2 November: Conference on digital transformation and low-tech.
- 22 November: The Banque de France is ranked first in the Green Central Banking Scorecard 2022, which ranks G20 central banks according to their environmental practices.
Consolidating an ambitious social and environmental strategy
As an engaged institution, the Banque de France has been pursuing a proactive corporate social and environmental responsibility (CSR) policy for many years. In a context of accelerating climate change and new ways of working, the Bank's CSR strategy in 2022 was consolidated around two imperatives: action and accountability.
1. Actions for the preservation of the environment
The Bank's monitoring of its environmental footprint
Review and external validation of the GHGEA methodology
The Banque de France reviewed the methodology for carrying out its greenhouse gas emissions assessment (GHGEA). A consultancy firm assisted it and validated all the elements.
The scope of the GHGEA declaration includes energy emissions, direct fugitive emissions, business travel, commuting and waste.
GHGEA published in 2022
The Bank's GHGEA was published on the website of the Agence de l'environnement et de la maîtrise de l'énergie (ADEME) at the end of 2022. The reporting year chosen, which is also the new reference year for its future GHGEA, is 2019, rather than 2020 and 2021, which are biased by the health crisis.
In the "carbon footprint" format, the three most emitting items are energy, commuting and business travel.
The GHGEA includes a transition plan that details the measures needed to achieve the objective set out in the strategic plan (a 15% reduction in GHG emissions over the 2019-24 period): changes in tertiary buildings, actions to reduce electricity consumption in this sector, in particular urban heating and cooling, gradual replacement of fossil fuels by electricity, optimisation of processes, promotion of eco-actions, speeding up of the acquisition of electric vehicles for the car fleet, continued reduction in waste-related emissions and in commuting – in particular through the implementation in 2023 of the sustainable mobility package – measures to complement the existing travel policy in order to limit business travel following the pandemic.
|Banque de France GHG emissions by R-GHGEA item||2019|
|Direct GHG emissions||13,795|
|Item 1: direct emissions from fixed combustion sources||13,008|
|Item 2: direct emissions from mobile sources with a combustion engine||547|
|Item 4: direct fugitive emissions||240|
|Indirect energy-related emissions||6,541|
|Item 6: indirect emissions linked to electricity consumption||3,806|
|Item 7: indirect emissions linked to the consumption of water vapour, heating and cooling||2,735|
|Other indirect GHG emissions||21,602|
|Item 8: energy-related emissions not included in items 1 to 7||4,930|
|Item 11: waste||2,987|
|Item 13: business travel||3,611|
|Item 22: commuting||10,075|
|Total GHG emissions||41,938|
Provisional GHGEA for 2022
The provisional amount of GHG emissions for 2022 stands at 32,458 tonnes of CO2 equivalent (tCO2e), estimated to be down10 by 9.3% compared with 2021.
Energy consumption fell by 10.1% compared with 2021, mainly due to the reduction in fossil fuel consumption (-34.1% for fuel oil and -22.7% for gas) caused by the ongoing relocation of branches to buildings with a smaller surface area that are not heated by these fuels. To a lesser extent, electricity and district heating consumption dropped by 3.2% and 2.9% respectively.
Energy-related emissions decreased by more than 17% compared with 2021, as a result of the fall in the share of carbon-based energy in the Bank's energy mix. However, gas is still the most emitting energy (55%), followed by electricity (28%).
After two atypical years due to the periods of health restrictions, 2022 was marked by the resurgence of emissions linked to air and rail travel. These emissions were nevertheless still well below pre-Covid levels (respectively -60% and -45% compared to 2019). Travel by train, which is less emissive, grew, particularly on the Paris-Frankfurt route, where 90% of journeys were made by train in 2022, compared with 73% in 2019. Emissions from personal vehicles continued to fall (-40% compared with 2019). Overall, emissions from business travel rose by 56.6% compared with 2021, but were 55% lower than in 2019.
Emissions related to commuting continued to decrease in 2022 (down by 5% compared with 2021), due to a slight decrease in the distances travelled, together with a greater shift from cars to public transport.
The Bank’s actions and policies to reduce its environmental footprint
The Banque de France has stepped up its efforts to reduce its environmental footprint in order to fight climate change. Committed to actively contribute to carbon neutrality, it has initiated work with the business lines concerned to define its low-carbon trajectory with milestones in 2024 and 2030. This reduction policy is based on a cross-functional approach to identify existing and future levers for action to reduce CO2 emissions and integrate the carbon dimension into activities (see Focus below: "Energy efficiency and sobriety: the Bank’s commitment").
Reducing our environmental footprint through a responsible real-estate policy
In 2022, the Bank made its first declaration of assets and energy consumption under the “Éco Energie Tertiaire”11 scheme. The plans to reduce energy consumption are based on three pillars: real-estate operations and maintenance, major works and eco-actions. At the same time, the Bank launched a shorter-term energy efficiency plan aimed at lowering energy consumption by 10% as of 2023 (base year: 2019). The Bank now applies an extra-financial analysis approach to the efficiency of its real-estate projects (see section 4 of this chapter: "Extra-financial analysis of internal investments").
Reducing our environmental footprint through more sustainable mobility
Two main levers are being used to reduce travel-related GHG emissions. The first is to increase the number of electric vehicles in the fleet and the number of charging stations. The second concerns employee commuting, with the introduction in 2023 of a proactive sustainable mobility package. Its amount, which will be proportionate to the practice of sustainable mobility, could reach the legal tax exemption ceilings. It adds to existing aid, such as the bonus for the purchase of bicycles, including electrically assisted bicycles.
Reducing our environmental footprint through digital sobriety
The environmental footprint of the information system was calculated for the period from 2019 to 2021 using the life-cycle analysis method.12 In 2021, it corresponded to 3,450 tCO2e. Levers (see infographic above: "Footprint of the Banque de France's information system") and a trajectory to 2024 were defined with the objective of lowering, as of 2023, the electricity consumption of data centres by 9% compared with 2019. The eco-design approach currently applied limits the consumption of IT and energy resources by terminals, networks and data centres. In order to encourage changes in practices, employees’ digital profiles provide individual statistics on electronic messaging and printing, along with best practices to reduce their impact and mental workload.
Awareness-raising on responsible digital technology continued with specific training sessions, collaborative educational workshops (Digital Fresks) and expert testimonies on the finiteness and depletion of non-renewable resources, low-tech, etc. The objective of these initiatives is to reconcile digital transformation and sobriety.
Reducing our impact on biodiversity
At the start of 2022, the Bank launched a project to create a landscape identity and to promote biodiversity through short circuits. Three pilot sites were selected for their exceptional gardens (at the Paris head office, Lille and Dijon). In Dijon, a specific landscaping study of the park produced an in-depth ecological assessment with the aim of promoting the arboreal heritage and raising public awareness.
Ensuring good understanding of the issues through specific training
Distance learning courses (one of which is mandatory) were set up to enable all staff members to grasp the causes, consequences and underlying issues of climate change and carbon neutrality. 5,065 employees completed the online training on climate issues with a success rate of over 80%. In addition, 800 employees took part in the Climate Fresk workshops, organised by 38 volunteer employees trained to run these sessions. Thematic training and awareness-raising events were also organised on a regular basis.
2. Actions for HR inclusion and collaborative initiatives
An ambitious policy to promote equality and diversity
For ten years, the Bank has been pursuing an active approach to promote equality, in particular with the signing of the European Equality, Diversity and Inclusion Charter, initiated by the European Central Bank.
Thanks to a dynamic policy of advancing women, the percentage of women on the Bank’s Executive Committee continued to rise, reaching 30.8% at the end of 2022 (up by more than 2 percentage points year-on-year), with four women among the ten highest paid.
The Bank's government has set itself the target of a minimum rate of 40% in 2024, four years before the legal obligation.13 In addition, the Bank's Gender Equality Index score increased for the first year, to 98/100.14
The employer branding fosters the representation of women and the identification of future female employees. In 2022, 60% of employees recruited through competitive examinations were women. Recruitment of contract staff also favoured women, reversing the trend.
The Bank is increasing its awareness-raising activities for newly-recruited staff: videos on stereotypes, promotion of sign language, tutorials on digital accessibility, training in inclusive management and discrimination-free recruitment. The Bank’s Talentu'elles collaborative network encourages the recognition of all talents and offers numerous conferences and information on the subject.
In addition, since 2017, the Bank has exceeded its baseline of having 6% of its positions filled by people with disabilities. It stood at 6.71% in 2022, up from 6.45% in 2021.
Actions to promote career-long employability of employees
The Bank supports each employee throughout his or her career through forward-looking skills management. Thus, 6.7% of the wage bill is allocated to training. In 2022, nine out of ten employees received training, with an average of four days of training per year.
The Bank promotes mentoring to disseminate best practices and develop professional ambitions. It offers and finances training courses leading to qualifications for sought-after scientific expertise positions.
Support provided to managers in the framework of the various forms of teleworking
The Bank provides support to managers in organising and managing teleworking to meet the needs for flexibility as this new form of organisation becomes increasingly widespread.
Of the Bank's new managers, 88% completed the induction course within six months of taking up their post in 2022. The Guide to Managerial Attitudes, which enables managers to position themselves against a benchmark, has been enhanced, digitised and made interactive. A specific application proposes concrete actions to manage day-to-day situations, and the range of training courses has been expanded (modules on hybrid management, prevention and management of stress and physical inactivity, autonomy and trust, intergenerational issues, etc.).
Staff involved and proactive in implementing CSR commitments
In 2022, the second edition of the Sustainability Challenge helped develop intrapreneurship (see Focus below: "Sustainability Challenge, ideas and actions").
In order to further encourage the mobilisation of employees around CSR issues, the Bank also set up a community of committed and willing employees to examine new actions to be implemented. A first assessment will be made in 2023.
The in-house deployment of the Climate Fresk led to the creation of a network of in-house “fresco artists” whose role is to raise awareness on climate change among their colleagues.
The Bank also supported a number of collaborative initiatives, including a solidarity run in aid of the Samu Social, participation in World Cleanup Day, a national fund-raising drive for the Restaurants du Cœur, and fund-raising for Ukrainian families. Every year, 25 employees are rewarded for their voluntary work with a trophy and EUR 2,000 for a sponsored association.
3. The Banque de France, a socially responsible corporate sponsor
The Bank is involved in three key areas: inclusion through education and for access to employment; the ecological transition; and the conservation of our cultural heritage through its history, its network and staff involvement.
Promoting economic and social inclusion
The Bank contributed to further enhancing educational success and access to culture for young people from disadvantaged social backgrounds through its support for several charities (Capital Filles, Association Jeunesse Éducation and Coup de Pouce).
The Bank pursued its long-standing partnership with the Fondation des Hôpitaux for the Pièces Jaunes operation to help children in hospital and their families. It also continued to support a number of microcredit associations.
As a partner of the Train pour l’Égalité of the Fondation des Femmes, the Bank took part in campaigns to raise awareness about women's rights and prevent all forms of violence against women.
Supporting the ecological transition
The Place de l'Emergence programme run by France Active, the committed entrepreneurs movement, contributed to supporting innovative projects with an impact on the circular economy, digital sobriety or biodiversity, thereby promoting the ecological transition.
As a partner of Emmaüs Connect, the Banque de France supports a socially responsible recycling scheme for IT equipment, while helping to reduce inequalities related to digital illiteracy.
Preserving, enhancing and promoting our heritage
During the European Heritage Days, the Bank welcomed 16,000 visitors, including 13,200 at its head office.
In September 2022, an exhibition organised with Citéco and the Musée des Beaux Arts in Arras gave the public an opportunity to discover the five aurei (Roman gold coins) from Beaurains, classified as a national treasure and purchased by the Bank.
The Bank also acquired the largest gold-bearing quartz found in France (weighing 3.3 kg, including 1 kg of gold) and put it on public display in the Mineralogy and Geology Gallery of the Muséum National d'Histoire Naturelle. This type of gold was used to manufacture Celtic and Roman coins.
Mobilising employees through skills sponsorship for non-profit associations
Around 50 employees are seconded to associations in the framework of skills sponsorship schemes for a few days or several months to carry out missions in a wide variety of fields, including social finance, education and digital inclusion.
4. Through its investments and procurement, the Bank aims to lead by example and promote a sustainable economy
Strengthening the Bank’s responsible investment approach
The Bank is continuing to strengthen its responsible investment approach for the asset portfolios for which it has full responsibility (own funds and pension liabilities portfolios, totalling EUR 21 billion). Its strategy is three-pronged:
- It is gradually aligning its asset portfolios with a global warming trajectory of 1.5°C by 2025, having reached the 2°C target by the end of 2021. In addition, it plans to completely exit the coal sector by the end of 2024 and to cap its exposure to other fossil fuels. The integration of this new area is reflected in the first investments in biodiversity impact funds and the launching of work to measure the biodiversity impact of these portfolios. The Bank is continuing to contribute to the financing of the energy and ecological transition by investing in green bonds and specific funds with an EET focus.
- It excludes 20% of assets from its equity investment universe on the basis of environmental, social and governance (ESG) criteria. In 2022, it shifted its ESG bond purchase programme towards social bonds.
- As a shareholder, the Bank has adopted a voting policy that includes ESG provisions that require, for example, that companies disclose information on the environmental impact of their activities. To keep in step with society's aspirations, it has decided to strengthen its voting criteria for setting a threshold of acceptability for the remuneration of company managers.
In 2022, the Bank gave concrete expression to its commitment by joining the Principles for Responsible Investment initiative, a UN-supported network of investors.
Continuing the responsible procurement approach
The Bank is stepping up its responsible procurement approach. For example, 35% of procurement procedures include environmental and social aspects in the form of criteria and clauses. It is increasingly working with companies that employ people with disabilities: reception, catering and management services for the Conference Centre, for example, include a minimum number of hours per year reserved for such people. Cleaning and gardening services also include an incentive social clause.
The Bank’s procurement strategy is based on the desire to support suppliers in reducing their carbon footprint. To date, 250 of the Bank's suppliers have signed the Responsible Procurement Charter.
Extra-financial analysis of internal investments
The Bank has adopted an innovative approach to integrating extra-financial criteria into its internal investment choices, such as the renovation of a property site, the conduct of an IT project or industrial processes (see below – Focus on Taking into account all impacts through the extra-financial analysis of projects). The aim is to gain a better understanding of all the impacts of these projects.
Energy efficiency and sobriety: the Bank’s commitment
As a public institution and a responsible enterprise, the Banque de France is committed to the national energy sobriety plan with concrete objectives for reducing its energy consumption.
The reduction of greenhouse gas emissions is included in the CSR strategy 21-24. The Bank is also seeking to set an example by controlling its energy consumption. An energy sobriety roadmap has been drawn up internally to ensure that everyone participates in securing the success of the collective and civic effort. Raising employee awareness about eco-responsible behaviour complements the structural measures and technical levers.
Within the framework of the energy efficiency plan, the Bank has already launched the Refondation project, which will enable it to halve the energy consumption of its industrial sector, and the Action 20 project, which concerns the modernisation of the premises of its entire network. Finally, the Bank is now taking environmental criteria into account in its decisions regarding the conduct of projects involving its equipment and technical infrastructure, in order to reduce their energy consumption.
These actions are supplemented by short-term measures to meet immediate challenges: temperature in workplaces, meeting rooms and social areas; reduction in the number of hot-water distribution points and lowering of lighting in circulation areas; generalisation of LEDs; acquisition of electric vehicles; promotion of a series of eco-gestures and continuation of the optimisation already initiated in technical management processes.
Taking all impacts into account through the extra-financial analysis of projects
In order to better assess all the benefits of its projects and their environmental, social and societal impacts, the Banque de France has developed a specific analysis tool resulting from an innovative approach. This approach, which is based on objectives shared by the Finance Directorate and the CSR Mission, aims to assess the value of projects in a global manner.
This tool, which was built with the help of all the operational staff concerned, is underpinned by systematic questioning to understand the more global performance of projects, by identifying all their impacts and monitoring them regularly. For real-estate projects, criteria such as pollution emissions (GHG, waste, etc.), resource consumption (water, etc.), and the impact on biodiversity, but also the quality of life at work, among others, were used. As regards IT projects, the analysis consists in supporting these projects in an eco-design approach.
This approach offers many advantages as it:
- ensures that investment decisions are consistent with the Bank’s corporate strategy, including CSR;
- formalises and assesses the social, societal and environmental impacts;
- provides tangible and quantifiable elements on these aspects to be integrated into decisions;
- makes project managers actors of the Bank's strategy.
The result is the integration of extra-financial analysis into the governance of the Bank's investments as a complement to the financial approach. For 2024, the objective is to measure a project’s value contribution based on three to five indicators (including user satisfaction and environmental impact).
This objective will apply to all new IT projects, all major non-IT projects and at least 50% of the amount of investments in various areas (real estate, security and industrial processes).
Sustainability challenge, ideas and actions!
The Sustainability Challenge enables employees to become actively involved in reducing the Bank's carbon footprint by submitting initiatives. In 2022, two selected projects were tested at the Banque de France Lab (see Chapter 4: "Transformation strategy") in intrapreneurship and were supported by external incubators.
The first project selected is an individual carbon footprint calculator, which enables Bank employees to measure and improve their everyday energy sobriety in the workplace. The trial made it possible to define the criteria and conditions for success: a simple and ergonomic interface and proposals for concrete reduction actions based on a robust calculator. The procedures for developing this calculator are currently being worked out.
The second project concerns the reuse of banknote offcuts resulting from the manufacturing process and offers a perfect example of a circular economy where nothing is lost. Indeed, instead of becoming waste, the offcuts are transformed into an innovative raw material whose intrinsic properties are valuable in numerous industrial applications (e.g. pallets) or for the general public (e.g. urban furniture). An initial assessment of the environmental impact shows that this approach could reduce CO2 emissions by up to 2,000 tonnes of CO2 equivalent per year. The production of the first objects will start in September 2023. Unique furniture made from thousands of banknotes shall be exhibited in the Bank's conviviality rooms and/or public reception areas by 2024.
The threat of cyber risk continued to grow in 2022. As soon as the war broke out in Ukraine, the Banque of France re-examined and, where necessary, reinforced its cybersecurity measures, and set up a restricted management committee, chaired by the First Deputy Governor, to closely monitor the situation. Cyber risk is thus one of the biggest operational risks that the Bank faces. To keep pace with the rapidly changing nature of the threat, the Banque de France continued to implement its 2021-24 strategic roadmap for cybersecurity and confirmed its four main objectives: increase the resilience of its information system, limit its use of cloud services, strengthen its data security and optimise the management of security compliance. As part of this strategy, it continued to work tirelessly to improve the protection of its information system and to alert staff to the risks, regardless of their position in the hierarchy. The Banque de France makes sure that it always complies with the relevant security rules, especially those applicable to its public service role. It also ensures that new IT projects incorporate appropriate security mechanisms right from their launch. The Bank conducts cyber-crisis management exercises and actively participates in Campus Cyber, of which it is a non-associate member.
Alongside these measures, the Banque de France has set up an internationally certified computer emergency response team (CERT), which is tasked with detecting and responding to cyberattacks. Its experts also contribute to numerous cybersecurity working groups at national, European and international level.
Ethics and compliance
The Banque de France continued to expand its compliance system in 2022 to ensure that it meets the highest standards of professional ethics.
The General Council took steps to reinforce the application of Article L. 142-8 of the French Monetary and Financial Code, notably by appointing the Bank’s Chief Ethics Officer as Ethics Officer for the members of the General Council.
In addition to the Code of Ethics, local ethical guidelines were put in place to ensure managers and staff can identify the specific risks to their departments and adopt appropriate preventive behaviour.
The anti-corruption system implemented by the Directorate General Banknote Manufacturing (which became the Directorate General Cash – Retail Payments on 1 March 2023) obtained ISO 37001 anti-corruption certification.
A charter on the integrity of Banque de France publications was drawn up and disseminated via a circular.
The Banque de France also completed its project to revise its Code of Ethics in line with the Eurosystem’s professional ethics framework. The new code should come into force as of 1 June 2023 at the latest.
7. Financial management and accounts
1. Financial balances
Strict management of Banque de France resources since 2015
Since its ﬁrst Ambitions 2020 strategic plan, which began in 2016, the Banque de France has been committed to reducing its workforce and controlling its operating expenses. This commitment was reafﬁrmed as part of the Building 2024 Together strategic plan launched at the beginning of 2021.
The strict management of its resources implemented by the Banque de France means that it has been able to reduce its net operating expenditure by 20% over the 2015-22 period. This represents a reduction of EUR 213 million or 3.5% per year in volume. Staff numbers have been reduced by 25% over the same period, which equates to a cutback in full-time equivalent employees of 3,093.
Signiﬁcant income for the community, particularly since 2015
In addition to this exemplary management of its expenses, it is important to highlight the substantial proﬁts made in previous years thanks to income generated by monetary policy and the Banque de France’s own assets. More recently, the unconventional monetary policies put in place by the euro area central banks have contributed to a sharp increase in their income, particularly due to the scale of their asset purchase programmes and proceeds from bank deposits as a result of negative interest rates. Thus, between 2015 and 2022, the Banque de France paid a cumulative total of almost EUR 32 billion to the state in corporation tax and dividends, driven by monetary policy income which amounted to EUR 25.7 billion. In addition to these direct payments, monetary policy also helped to substantially reduce the debt burden of the government, which for several years was able to issue at low and even negative rates. Thanks to the Banque de France’s productivity drives in recent years, it has also been able to reduce the cost of the services it provides to the state by 22%, or EUR 62 million, over a seven-year period.
|2010||2011||2012||2013||2014||2015||2016||2017||2018||2019||2020||2021||2022||Cumulative total since 2015|
|TOTAL PAYMENT TO THE STATE||3,118||3,090||5,497||4,148||3,654||3,445||4,502||4,996||5,622||6,128||3,546||2,463||1,067||31,769|
Payments to the state since 2010 (EUR millions)
Exiting unconventional monetary policies reduces central bank income
The 2022 reporting period saw the normalisation of monetary policy, with major and closely spaced hikes in key rates to combat inﬂation following a series of unprecedented shocks. The result is a less favourable outlook for monetary policy income, and even losses, which can be seen in the case of the vast majority of central banks that have carried out unconventional monetary policies, particularly in the United States, Canada and Australia, and in non-euro area European countries such as the United Kingdom, Switzerland and Sweden.
Within the framework of the asset purchase programmes, the Eurosystem central banks acquired public and private sector bonds with longer maturities to allow interest rates to decrease while key rates had been reduced to close to zero. These long-term, low, and even negative, ﬁxed-rate securities are offset on the liabilities side by bank deposits that bear interest at a deposit facility rate that has now become positive, and which thus represent an expense for central banks. Due to this asymmetrical impact of interest rate rises on assets characterised by long-term securities compared with liabilities that are highly liquid, monetary policy income will continue to be negatively affected by key rate hikes until the liquidity surplus (of almost EUR 3,800 billion at the end of December 2022 at Eurosystem level) is absorbed. This surplus diminishes as monetary policy securities and targeted longer-term reﬁnancing operations (TLTRO III) reach maturity.
Over the longer term, income from bond and other asset holdings and loans will increase. Ultimately, restoring a positive interest rate environment will support the proﬁtability of the Eurosystem in the medium term.
For the Banque de France over the coming ﬁnancial periods, the expected future path of key rates will result in signiﬁcant expenditure to remunerate this excess liquidity; estimating the scale of that expenditure is highly uncertain as it depends on future monetary policy decisions, which in turn depend on changes in inﬂation.
The primary objective of the Eurosystem’s monetary policy is price stability, not proﬁtability. However, the credibility and the capacity to act of central banks relies on the ﬁnancial solidity of their balance sheets, i.e. their levels of capitalised reserves, with appropriate provisioning of risks.
Against this backdrop, the Banque de France’s priority is to boost its reserves to tackle these costs and therefore to allocate the proﬁt for 2022 to maximising the fund for general risks (FRG), raising it to EUR 16 billion, in line with the increases made in previous years (EUR 1.15 billion and EUR 2.80 billion in 2020 and 2021, respectively). By mobilising a part of the reserves it has put aside, in tandem with its strict ﬁnancial management, the Banque de France should be able to maintain balanced results over the coming years without having to turn to recapitalisation from its shareholder, the French state, or reporting negative capital.
2. Financial statements of the Banque de France
The Banque de France’s General Council approved the ﬁnancial statements for the year ended 31 December 2022 at its meeting of 17 March 2023.
The Banque de France’s balance sheet reduced from EUR 2,037 billion at 31 December 2021 to EUR 1,884 billion at 31 December 2022. This EUR 153 billion contraction is the direct result of the monetary policy normalisation measures taken from July 2022 onwards, particularly limiting monetary policy securities purchases to the reinvestment of maturities from April 2022 for the PEPP (pandemic emergency purchase programme) and from July 2022 for the APP (asset purchase programme), and additional voluntary early repayment dates for targeted longer-term reﬁnancing operations (TLTRO III), which came into effect on 23 November 2022 in conjunction with their new terms and conditions of remuneration.
Euro-denominated securities acquired under purchase programmes thus only rose by EUR 51 billion (compared with a prior-year increase of EUR 207 billion) and outstanding loans to credit institutions decreased by EUR 159 billion, mainly due to early TLTRO III repayments in November and December 2022. On the liabilities side, there was a signiﬁcant decline in the current account balance of credit institutions, investment companies and general government (down EUR 131 billion).
Net income from activities amounted to EUR 7,722 million in 2022, up EUR 667 million year-on-year despite the hike in expenses related to remunerating excess liquidity at the deposit facility rate, which returned to positive territory on 14 September 2022 and rose thereafter for the remainder of the year. The new terms and conditions for the remuneration of TLTRO III operations (aligning their rate of remuneration with that of excess liquidity from 23 November 2022) resulted in a sharp decline in the expenses on reﬁnancing operations recorded in 2022. Moreover, income from inﬂation-linked securities held as part of the APP and PEPP purchase programmes increased sharply in line with rising inﬂation.
Operating expenses rose by EUR 646 million year-on-year to EUR 2,245 million, largely due to the Banque de France’s payment of its employees’ statutory pensions as Employee Reserve Fund (CRE) assets failed to fully cover the year-end pension commitments.15 Equally, operating expenses in 2022 include employer social security contributions in respect of the pensions of its statutory employees. In previous ﬁnancial statements, these contributions were allocated to the CRE’s capital as part of the distribution of the Banque de France’s net proﬁt. Setting aside these two items, operating expenses were up by EUR 28 million, notably including the salary measures implemented on 1 July 2022.
After operating expenses, proﬁt before tax came in at EUR 5,477 million, up EUR 21 million compared with 2021. Given the risks carried on its balance sheet and linked to the assets acquired as part of the purchase programmes, and taking into account future expenses related to remunerating excess liquidity within the Eurosystem (see previous section on ﬁnancial balances), the Banque de France continued to augment its fund for general risks to cover its ﬁnancial risks (excluding exchange rate risk) in 2022. It thus increased the fund by EUR 4,412 million to EUR 16.4 billion (following allocations of EUR 1,150 million in 2020 and EUR 2,800 million in 2021). After accounting for this allocation and corporate income tax amounting to EUR 1,067 million, net proﬁt for 2022 was zero.
The balance sheet and proﬁt and loss account
|Notes to the balance sheet||ASSETS||At 31 Dec. 2022||At 31 Dec. 2021|
Foreign currency assets (excluding relations with the IMF)
2.1 Foreign currency assets held with non-euro area residents
|3||A3||Relations with the IMF||44,949||42,458|
|5||A4||Euro-denominated claims on non-euro area residents||438||620|
|4||A5||Euro-denominated loans to euro area credit institutions related to monetary policy operations||321,145||480,367|
|5||A6||Other euro-denominated loans
to euro area credit institutions
Euro-denominated securities issued by euro area residents
|A8||Relations within the Eurosystem||107,839||141,650|
|11||8.1 Participating interest in the ECB||1,901||1,777|
8.2 Claims arising on the transfer
8.4 Other claims on the Eurosystem
|8||A9||Advance to the IEDOM||7,525||7,337|
|A10||Claims on the French Treasury||0||0|
|9||A11||Other euro and foreign currency denominated ﬁnancial assets||118,142||
13.1 Tangible and intangible ﬁxed assets
13.2 Participating interests other than the ECB
|Notes to the balance sheet||LIABILITIES||At 31 Dec. 2022||At 31 Dec. 2021|
|12||L1||Banknotes in circulation||295,393||290,198|
Euro-denominated liabilities to euro area credit institutions related to monetary policy operations
|13||L3||Other euro-denominated liabilities to euro area credit institutions||26,984||28,162|
|14||L4||Euro-denominated liabilities to non-euro area residents||49,545||70,840|
|2||L5||Foreign currency liabilities||1,118||2,335|
|3||L6||Counterpart of SDRs allocated by the IMF||37,034||36,403|
|15||L7||Relations within the Eurosystem||14,799||627|
Euro-denominated liabilities to other euro area residents
8.2 Other liabilities
8.2 : 59,273
|17||L9||Items in course of settlement||41||39|
|20||L12||Provisions for liabilities and charges||650||688|
Fund for general risks and tax-regulated provisions
|23||L15||Revaluation reserve for state gold and foreign exchange reserves||22,771||22,537|
|24||L17||Capital, reserves and retained earnings||8,932||10,007|
Note: Each item of the balance sheet and profit and loss account is rounded up or down to the nearest EUR million. For this reason, discrepancies between totals or sub-totals and the items underlying them may arise. This also applies to the figures presented in the Notes to the financial statements.
|Notes to the P&L||2022||2021|
|1||Net income from Banque de France activities||7,722||7,055|
|29||1.1||Net interest income||7,458||6,728|
|1.1.1||Interest and related income||16,869||11,806|
|1.1.2||Interest and related expenses||-9,411||-5,078|
|30||1.2||Net income from ﬁnancial transactions||-446||89|
|1.2.1||Net realised gains/losses and unrealised losses on foreign exchange||235||355|
|1.2.2||Net allocations to/reversals from the foreign currency revaluation reserve||-235||-355|
|1.2.3||Other income and expenses on ﬁnancial transactions, net||-446||89|
|1.3||Fees and commission||-10||-7|
|1.3.1||Fees and commission income||38||39|
|1.3.2||Fees and commissions expenses||-48||-45|
|31||1.4||Income from equity securities and participating interests||56||162|
|32||1.5||Net result of pooling of monetary income||-94||-627|
|33||1.6||Other income and expenses, net||757||710|
|34||2.1||Staff costs and related expenses||-1,009||-859|
|2.2||Pensions and related expenses||-526||-36|
|2.3||Taxes other than income tax||-36||-40|
|2.4||Provisions, depreciation and amortisation||-163||-168|
|2.5||Other operating income and expenses, net||-511||-496|
|Proﬁt before tax and exceptional items (1 + 2)||5,477||5,456|
|22||3||Net additions to fund for general risks and tax-regulated provisions||-4,410||-2,798|
|35||5||Corporate income tax||-1,067||-1,895|
|Net proﬁt for the year (1 + 2 + 3 + 4 + 5)||0||763|
3. Notes to the ﬁnancial statements
Accounting principles and valuation methods
The annual ﬁnancial statements of the Banque de France are presented in accordance with a format decided by its General Council16 and with the provisions of the Order of the Minister of the Economy, Finance and Industry of 7 February 2000, which was amended on 16 November 2010. Their structure is designed to reﬂect the speciﬁc nature of the tasks carried out by the Banque de France as part of the European System of Central Banks (ESCB), and its diverse range of activities. The ﬁnancial statements are expressed in millions of euro.
The accounting and valuation methods applied by the Banque de France are deﬁned in Article R. 144 6 of the French Monetary and Financial Code, which speciﬁes the following provisions.
- For all activities carried out within the ESCB framework, the Banque de France must comply with the accounting and valuation methods laid down by the European Central Bank (ECB) in its Guideline of 3 November 2016 (ECB/2016/34), amended in 2019 (ECB/2019/34) and in 2021 (ECB/2021/51). This Guideline establishes in particular the accounting rules applicable to reﬁnancing operations for the banking sector, securities, foreign currency transactions carried out in the course of foreign exchange reserve management, and the issue of banknotes.
- The accounting rules established by the Autorité des normes comptables (ANC – the French accounting standards authority) apply to all the Banque de France’s other activities. However, the Banque de France’s General Council may also decide to apply the accounting and valuation methods recommended by the ECB.
With effect from 1 January 2003, the General Council extended the accounting methods laid down by the ECB Governing Council to securities portfolios recorded in asset item A11. Since 1 January 2018, and by decision of the General Council, this provision has also applied to securities portfolios held in the Banque de France Employee Reserve Fund recorded in asset item A12.
General accounting principles
The accounting rules are applied in accordance with the principles of prudence, going concern, consistency (of methods between reporting periods), accruals, matching and revenue recognition (independence of reporting periods), cost (economic reality), full disclosure, and recognition of post-balance sheet events.
Foreign currency transactions and resulting gains and losses
Spot and forward purchases and sales of foreign currencies are recorded as off balance sheet commitments at the trade date. They are recognised in the balance sheet at the settlement date.
Gold and foreign currency positions are valued at year-end on the basis of the prevailing rates and prices on the last business day of the year. Unrealised gains are recorded as liabilities in the revaluation accounts (item L13). Unrealised losses are recorded in proﬁt and loss item 1.2.1 as ﬁnancial transaction expenses. Unrealised gains and losses are not offset.
Foreign currency gains and losses on gold and foreign exchange reserves
Realised gains and losses are calculated for each currency. A weighted average price is calculated daily, ﬁrstly on inﬂows (spot or forward purchases on the trade date, and foreign currency denominated income, in particular daily accrued interest), and secondly on outﬂows (spot or forward sales on the trade date, and foreign currency denominated expenses). The realised gain or loss is calculated by applying the difference between these average prices to the lower of the day’s inﬂows or outﬂows.
When outﬂows exceed inﬂows, a second realised gain or loss is calculated, which equates to the difference between (i) the net outﬂows of the day valued at the average outﬂow price and (ii) the net outﬂows of the day valued at the average price of the day’s opening position. When inﬂows exceed outﬂows, the net inﬂow is added to assets held at the beginning of the day, thereby changing the average price of the position.
Revaluation reserve for state gold and foreign exchange reserves (RRRODE)
The agreement between the state and the Banque de France dated 20 December 2010 and published on 2 February 2011 neutralises the impact on the Banque de France’s proﬁt and loss account of realised gold and foreign currency gains and losses (including currency option premiums) and unrealised losses at year-end, thanks to a mechanism whereby the counterpart in the proﬁt and loss account is symmetrically offset against the RRRODE. The amount of net foreign currency gains taken to the RRRODE is limited to the net proﬁt for the year before transfers to the reserves.
The agreement also stipulates that:
- the amount of the RRRODE must be at least equal to 12% of the gold and foreign currency positions and must also be sufﬁcient to cover the losses that would arise if prices fell to their worst level of the past ten years;
- if the RRRODE falls below its minimum amount as deﬁned above, it shall be replenished by way of an appropriation from proﬁt for the ﬁnancial year (not exceeding 20% of net proﬁt).
Foreign currency gains and losses other than on gold and foreign exchange reserves
The Banque de France applies ANC Regulation 2014-03 to foreign currency transactions that are not connected to its main responsibilities as a central bank. Foreign currency deposits and investments are marked to market on the last business day of the year. Realised and unrealised foreign currency gains and losses are recorded in proﬁt and loss item 1.2.3, “Other income and expenses on ﬁnancial transactions, net”. Accrued income and expenses are converted into euro at the rate prevailing on the day the transaction is recorded. Forward foreign currency hedges are valued at the closing date exchange rate.
Securities held by the Banque de France are recorded in the following balance sheet items:
- A2 for foreign currency denominated securities held in connection with foreign exchange reserve management;
- A7.1 for securities held for monetary policy purposes;
- A11 for euro-denominated securities earmarked against the Banque de France’s own funds, provisions and customer deposits recorded in items L4 or L10;
- A12 for securities held in the Banque de France Employee Reserve Fund;
- A4 or A7.2 for other euro-denominated securities depending on whether they are issued by non-residents or residents.
Securities held for monetary policy purposes
Debt securities held for monetary policy purposes (item A7.1) are valued at amortised cost, regardless of their holding intention. They may therefore be sold before maturity if the ECB Governing Council so recommends. Impairment tests are conducted annually.
Other securities are recognised as follows.
- Debt securities that the Banque de France has decided to hold to maturity are recognised in the ﬁnancial statements at amortised cost. They are tested for impairment annually and may be written down if there is a risk of non-recovery.
- Debt securities that may be sold before maturity and equities (or similar securities) are marked to market on a line-by-line basis on the last business day of the year. Unrealised gains are recorded as liabilities in the revaluation accounts (item L13). Unrealised losses are recorded in proﬁt and loss item 1.2.3 as ﬁnancial transaction expenses. Unrealised gains and losses are not offset. Gains and losses arising from sales carried out during the year are calculated on the basis of the weighted average price of each line of securities and are recorded in proﬁt and loss item 1.2.3, “Other income and expenses on ﬁnancial transactions, net”.
For all debt securities, differences between the acquisition price and the redemption price are spread over their remaining lives on a discounted basis. Implicit options that may be included in these securities are not valued separately.
Marketable investment fund units, held for investment purposes without the Banque de France intervening in the decisions on the purchase or sale of the underlying assets, are recognised at their year-end net asset value. No offsetting is performed between unrealised gains and losses on the various units of the marketable investment funds held.
Lastly, non-marketable investment fund units are recognised in the balance sheet at purchase cost. At the end of the ﬁnancial period, the units are valued at the lower of their historical cost and value in use. When the latter is lower than the purchase cost, the units are written down.
Speciﬁc treatment of Banque de France Employee Reserve Fund securities
The rules described in the note on “Other securities” apply to the securities held in the Caisse de réserve des employés (CRE – the Banque de France Employee Reserve Fund). However, unrealised losses recognised on debt securities that can be sold, equities and units of marketable investment funds in connection with their mark-to-market, as well as the gains and losses on disposal of these securities, are booked to the Employee Reserve Fund’s equity capital. Consequently, there is no impact on the Banque de France’s proﬁt and loss account. The same applies to any depreciation recognised by way of provisions for debt securities held to maturity and for non-marketable investment fund units (see Note 28).
Interest rate ﬁnancial futures traded on organised markets are recorded off balance sheet at the notional amount, while daily margin calls paid or received are recognised in proﬁt and loss item 1.2.3.
Interest rate swaps are marked to market at 31 December. Unrealised gains are recorded as liabilities in the revaluation accounts (item L13). Unrealised losses are recorded in proﬁt and loss item 1.2.3 as ﬁnancial transaction expenses. Unrealised gains and losses are not offset. Unrealised losses are amortised over the remaining life of the contract. The interest is recorded in proﬁt and loss item 1.1 on an accruals basis.
Currency option premiums are recorded on the asset side of the balance sheet if they relate to purchases and on the liabilities side if they relate to sales. In the event that the option is exercised, the premium is included in the price of the currency purchased. If the option is not exercised, at its expiry date the premium is recorded in proﬁt and loss item 1.2.1, “Net realised gains/losses and unrealised losses on foreign exchange”. At year-end, the premium amounts booked to the proﬁt and loss account during the year are transferred to the state gold and foreign exchange revaluation reserve (RRRODE) in the same way as realised foreign currency gains and losses (see above).
Open positions on currency options are marked to market at the balance sheet date. Unrealised gains are recorded as liabilities in the revaluation accounts (item L13). Unrealised losses are recorded in proﬁt and loss item 1.2.3 as ﬁnancial transaction expenses. Unrealised gains and losses are not offset.
Forward foreign currency transactions with customers (see Note 26) are marked to market at 31 December.
Eurosystem claims and liabilities
Eurosystem claims and liabilities arise on cross-border euro payments made within the European Union and settled in central bank money. These payments are allocated to TARGET2 (the Trans-European Automated Real-time Gross settlement Express Transfer system) and give rise to bilateral balances in the TARGET2 accounts of the ESCB central banks. All these bilateral claims and liabilities are netted out on a daily basis within the TARGET2 system so that each national central bank (NCB) has a single net bilateral position vis-à-vis the ECB.
The Banque de France’s net position in TARGET2 is carried on the Banque de France’s balance sheet either as a net liability to the Eurosystem in item L7 (see Note 15) if it is a creditor or as a net claim on the Eurosystem in item A8 (see Note 7) if it is a debtor.
The Banque de France’s participating interest in the ECB is recorded in balance sheet item A8.1 (see Note 11). This item also includes the net amounts paid by the Banque de France in connection with an increase in the proportion of its subscription of the ECB’s equity value resulting from a change in the capital key.
The Banque de France’s claim on the ECB resulting from the transfer of a part of reserve assets is recorded in item A8.2; the claim that results from interim dividends and accrued income receivable from the ECB in respect of the allocation of the balance of monetary income (see Note 7) is recorded in item A8.4; and lastly the claim that results from the shared responsibility for issuing euro banknotes among NCBs and the ECB is recorded in item A8.3. Accrued expenses in respect of the pooling of monetary income are recorded in liability item L7 (see Note 15).
Tangible and intangible fixed assets
Tangible and intangible fixed assets are valued and accounted for in accordance with French reporting standards.
Land is carried at acquisition cost. Buildings and equipment are carried at historical cost, less depreciation or provisions for impairment booked since they were brought into service.
In accordance with Article 322-1 of the plan comptable général (French general chart of accounts), the depreciation period for each asset is determined on the basis of its probable useful life. The Banque de France’s property assets are therefore depreciated over 10, 20, 33 or 50 years, depending on the asset type. Computer equipment is depreciated over 2 to 10 years and other equipment is depreciated over periods ranging from 3 to 12 years. Purchased software is amortised over 3 to 6 years. Most ﬁxed assets are depreciated using the straight-line method. In accordance with ANC Regulation 2014-03, the useful life of ﬁxed assets is reviewed regularly and modiﬁed as required.
External expenses relating to the development and integration of computer software are capitalised.
Projects developed by one or more Eurosystem NCBs are capitalised in accordance with the full cost accounting methodology set down by the Eurosystem. The Banque de France recognises any share in those projects – calculated at the Eurosystem level – in the total amount to be capitalised.
Accelerated tax depreciation is applied to ﬁxed assets that can be depreciated more rapidly for tax purposes than for accounting purposes.
Banknotes in circulation
The ECB and the euro area member NCBs that together make up the Eurosystem issue euro banknotes. The total value of euro banknotes in circulation in the Eurosystem is allocated on the last business day of each month in accordance with the banknote allocation key.17 The ECB has been allocated an 8% share of euro banknotes in circulation, with the remaining 92% allocated between NCBs according to their share of the ECB’s paid-up capital.
The share of banknotes in circulation allocated to the Banque de France is disclosed in liability item L1, “Banknotes in circulation”.
The difference between the value of banknotes in circulation allocated to each NCB in accordance with the banknote allocation key and the value of banknotes actually put into circulation by the NCB gives rise to an interest-bearing intra Eurosystem position presented in item A8.3 if it is a debit and in item L7 if it is a credit. This position earns interest18 at the main reﬁnancing operation rate. The corresponding interest income and expenses are included in proﬁt and loss item 1.1, “Net interest income”. A mechanism to smooth any adjustments that may arise during the ﬁrst ﬁve years following a country’s entry into the euro area has been implemented. No NCB was concerned by this mechanism in 2022.19
Dividend paid by the ECB
The ECB’s seigniorage income arising from its 8% share of euro banknotes in circulation, as well as the income generated on its monetary policy securities purchased under the SMP, CBPP3, ABSPP, PSPP and PEPP programmes,20 are distributed in January of the following year in the form of an interim dividend unless the ECB Governing Council decides otherwise.21 This income is distributed in full unless it exceeds the ECB’s profit. The ECB Governing Council may decide to transfer all or part of this income to the provision for ECB financial risks. It may also decide to deduct the total expenses paid by the ECB for the issuing and handling of euro banknotes from the total income from euro banknotes in circulation to be distributed in January.
The amount distributed to NCBs is recorded in proﬁt and loss item 1.4, “Income from equity securities and participating interests”.
Fund for general risks
The fonds pour risques généraux (FRG – fund for general risks) is intended to cover the possible risks to which the Banque de France is exposed through its activities, except for the exchange rate risk on gold and foreign exchange reserves, which is covered by the relevant revaluation accounts and by the RRRODE (see above). Its amount is determined on a discretionary basis based on exposures at the balance sheet closing date and an analysis of the attendant risks using a forward-looking approach. It is booked as a liability in item L14. Charges to and reversals from the fund are recorded through item 3 of the profit and loss account.
See Note 28.
Changes in accounting presentation
There were no changes in accounting presentation in the annual financial statements for the year ended 31 December 2022.
Key events in 2022
In a context of high inﬂation, the ECB Governing Council adopted a series of measures aimed at normalising the Eurosystem’s monetary policy:
- key interest rates were raised four times in 2022 from 27 July onwards;
- securities purchases made as part of the PEPP and APP programmes were limited to the reinvestment of maturities from 1 April 2022 and 1 July 2022, respectively;
- new terms and conditions for the remuneration of TLTRO III operations were brought into effect from 23 November 202222 with additional voluntary early repayment dates.
These measures resulted in a contraction in the total Banque de France balance sheet of 7.5%, in contrast to the robust growth reported in 2020 and 2021 of 52% and 17%, respectively.
Post‑balance sheet event
Between the end of the 2022 ﬁnancial reporting period and the date on which the Banque de France’s General Council approved the ﬁnancial statements, the ECB Governing Council twice decided, on 2 February 2023 and 16 March 2023, to increase each of the three key ECB interest rates by 50 basis points. The interest rate on the main reﬁnancing operations and the interest rates on the marginal lending facility and the deposit facility were thus increased to 3.00%, 3.25% and 2.50%, respectively, as from 8 February 2023, and then to 3.50%, 3.75% and 3.00% in March 2023.
Note 1: Gold
At 31 December 2022, the Banque de France held 78 million ounces (2,436 tonnes) of ﬁne gold. The increase in the equivalent euro value of these reserves is due to the rise in the market price of gold.
Note 2: Foreign currency assets and liabilities
Foreign currency assets are mainly US dollar holdings. Holdings in other currencies are intended to diversify risks. A breakdown of holdings by main currencies is provided below.
|US dollar (USD)||73|
|Australian dollar (AUD)||5|
|Net assets vis-à-vis the IMF (SDR)||12|
|ASSETS – Foreign currency assets||2022||2021|
|Foreign currency liquidity provision to Eurosystem counterparties||0||0|
|Securities received under repurchase agreements||2,829||2,972|
|Fixed‑rate or index‑linked bonds||49,461||47,065|
|o/w recognised at amortised cost||34,268||32,523|
|o/w marked to market line‑by‑line||15,193||14,542|
|Accrued interest receivable||378||243|
|LIABILITIES – Foreign currency liabilities||2022||2021|
|Securities delivered under repurchase agreements||1,104||2,334|
|Accrued interest payable||15||1|
Foreign exchange reserves are invested in overnight deposits, fixed-term deposits and fixed-rate and index-linked bonds. As part of its foreign exchange reserve management, the Banque de France lends and borrows foreign currency denominated securities through repo and reverse repo transactions. These transactions are recorded in asset item A2 and liability item L5.
Note 3: Relations with the IMF
The increase in the reserve tranche position in 2022 is the result of greater use – an increase of 633 million special drawing rights (SDR) – of France’s quota in euro (drawdowns net of repayments).
At the end of 2022, loans granted under New Arrangements to Borrow (NAB) amounted to SDR 91 million (EUR 114 million), down SDR 133 million year-on-year. Loans to the Poverty Reduction and Growth Trust (PRGT) granted by the Banque de France amounted to SDR 1,533 million (EUR 1,919 million), up SDR 97 million compared with 2021.
Other changes mainly arise from ﬂuctuations in SDR valuations against the euro.
|Receivables from the IMF|
|Reserve tranche position||7,060||6,188|
|Loans as part of the NAB||114||276|
|Loans as part of the PRGT||1,919||1,775|
|Accrued interest receivable||202||4|
|Counterpart of SDRs allocated by the IMF||36,865||36,400|
|Accrued interest payable||169||3|
In accordance with the agreement of 20 December 2010 between the state and the Banque de France on the management of and accounting for state foreign exchange reserves, International Monetary Fund (IMF) receivables and liabilities are recognised in the Banque de France’s balance sheet.
On the asset side:
- The reserve tranche position is equal to the proportion of the IMF quota (France’s share in the IMF’s capital) settled in gold and foreign currencies plus or minus the net utilisation of the quota in euro. Since 2016, France’s quota has been SDR 20.2 billion.
- Special drawing rights(SDRs) allocated to IMF member countries in proportion to their quota, or acquired under voluntary swap agreements with IMF-designated member countries.
- Loans granted to the IMF within the framework of the New Arrangements to Borrow (NAB) and the Poverty Reduction and Growth Trust (PRGT) set up under the auspices of the IMF for low income countries, or drawdowns on the quota.
The cumulative SDR allocations by the IMF to France are recorded in liability item L6. The last entry was made on 23 August 2021 to reﬂect an allocation of SDR 19.3 billion, thus raising the total to SDR 29.5 billion.
Note 4: Loans to and deposits from credit institutions related to monetary policy operations
Transactions carried out by the Banque de France with credit institutions within the framework of the Eurosystem’s monetary policy are recorded in asset item A5 and liability item L2.2.
On the asset side, item A5 includes loans granted to credit institutions of EUR 326 billion (excluding accrued interest receivable). The risks related to these transactions are shared within the framework of the Eurosystem on the basis of a Eurosystem key, which is calculated for each NCB as the proportion of its subscription of the ECB’s capital (its capital key) compared with the total capital keys for all euro area NCBs (see Note 11). At 31 December 2022, the Banque de France thus bore the risks on 20.42%23 of loans to credit institutions granted by the Eurosystem NCBs, which amounted to EUR 1,324 billion at that year-end. As loans to credit institutions are secured by collateral, losses may occur only in the event of counterparty default when the sums from the sale of the collateral are insufﬁcient to cover the loans granted.
Loans to credit institutions cover the following.
- Main ﬁnancing operations, which are short-term open market operations conducted by the Eurosystem. They play a key role in steering interest rates, managing bank liquidity and signalling monetary policy stances. They are conducted through weekly tenders in the form of temporary sales of assets (repurchase agreements) with a one-week maturity. Since October 2008, these operations have been conducted as ﬁxed-rate tender procedures.
- Longer-term reﬁnancing operations (LTROs) and targeted longer-term reﬁnancing operations (TLTROs) carried out at a ﬁxed rate with full allotment.
In 2019, the ECB Governing Council launched seven quarterly operations (TLTRO III). The ﬁrst two matured in 2022. Three new operations were added between June 2021 and December 2021. All of these operations have a three-year maturity and can be totally or partially repaid on a quarterly basis.
Based on the initial decisions of the ECB Governing Council, the interest rate applicable to TLTRO III operations depended on the outstanding amount of lending granted to the real economy by the borrowing institutions and could be as low as the average interest rate on the deposit facility prevailing over the life of the operation. In 2020, in response to the Covid-19 crisis, the ECB Governing Council decided that for the periods from 24 June 2020 to 23 June 2021 and from 24 June 2021 to 23 June 2022 (referred to as the special interest rate period and additional special interest rate period, respectively), the applicable interest rate could be as low as 50 basis points below the average interest rate on the deposit facility prevailing over the same period, but in any case no higher than -1%. Moreover, on 27 October 2022, the ECB Governing Council decided to index the interest rate of each TLTRO III operation to average applicable key ECB interest rates from 23 November 2022 until the maturity date or early repayment date. On the same date, the ECB Governing Council also put forward three additional voluntary early repayment dates.
Therefore, the actual interest rates for these TLTRO III operations can only be known for each operation when it matures or is repaid early. A reliable estimate is not possible until that time unless interest rate information for the special interest rate period and the additional special interest rate period has been communicated to counterparties. The following rates were thus taken into account to calculate accrued interest on TLTRO III operations in the 2022 ﬁnancial statements:
- until 23 June 2022, the interest rate for the additional special interest rate period communicated to counterparties on 10 June 2022;
- for the period from 24 June 2022 to 22 November 2022, the average applicable key interest rate calculated from the date the funds were made available until 22 November 2022;
- for the period from 23 November 2022 to 31 December 2022, the average applicable key interest rate calculated over that period.
In addition, the changes in key interest rates in 2022 also modiﬁed the calculation of interest applicable from the date the funds were made available until 23 June 2020. Their impact is recognised in the 2022 ﬁnancial statements.
|Main reﬁnancing operations||8||43|
|Longer-term reﬁnancing operations||326,371||486,574|
|Marginal lending facilitiesb||0||0|
|Margin calls paid||0||0|
|Accrued interest receivable||-5,233||-6,250|
|Collection of ﬁxed-term depositsa||0||0|
|Margin calls received||0||0|
|Accrued interest payable||79||-31|
a Fine-tuning operations/collection of ﬁxed-term deposits are executed on an ad-hoc basis with the aim of managing market liquidity and steering interest rates. Fine-tuning operations take the form of reverse transactions, outright cross-currency swaps or the collection of ﬁxed-term deposits, generally executed by means of quick tenders or bilateral procedures.
b Marginal lending facilities are overnight facilities granted in the form of reverse transactions to Banque de France counterparties at their request. Interest is paid on these facilities at a rate ﬁxed by the Eurosystem.
Deposits from credit institutions related to monetary policy operations held by the Banque de France are recorded in liability item L2, and include the following.
- Credit institutions’ current accounts held by the Banque de France and recorded in liability item L2.1. Current account amounts are made up of minimum reserve requirements (calculated as 1% of the reserve base24 since January 2012) and sums in excess of minimum reserve requirements. Since 2021, funds that are not freely available to credit institutions have been recorded separately in liability item L3, “Other euro-denominated liabilities to euro area credit institutions” (see Note 13).
- Deposit facilities, recorded in liability item L2.2, which enable Banque de France counterparties to make overnight deposits, remunerated at a rate set by the ECB Governing Council.25
Until 20 December 2022, minimum reserve requirement holdings bore interest at the average MRO rate over the period during which the reserves were built up. On 27 October 2022, the ECB Governing Council decided to set the remuneration of minimum reserves at the deposit facility rate as from 21 December 2022.
Deposits in excess of minimum reserve requirements bear interest at the lower of 0% or the deposit facility rate. However, the two-tier system for excess reserve remuneration introduced by the ECB Governing Council on 30 October 2019 was applied during the reporting year until it was suspended on 14 September 2022 when the deposit facility rate rose above zero. Thus, under this system, part of the excess liquidity of credit institutions (i.e. reserve holdings in excess of minimum reserve requirements) was not subject to the negative remuneration corresponding to the application of the deposit facility rate. For each institution, the exempt tier of reserve holdings was calculated as a multiple of six times its minimum reserve requirements. The exempt tier was remunerated at an annual rate of 0%. The non-exempt tier of excess liquidity holdings was remunerated at the lower of 0% or the deposit facility rate.
Note 5: Euro‑denominated claims on non‑euro area residents (A4) and Other euro‑denominated loans to euro area credit institutions (A6)
These items include euro-denominated investments earmarked against euro-denominated deposits, particularly securities purchased under repurchase agreements, recorded in liability item L4 (see Note 14). These amounts, unrelated to monetary policy operations, are split between asset items A4 and A6 on the basis of whether the counterparty is located within or outside the euro area.
|Securities held to maturity||255||448|
|Accrued interest receivable||1||4|
|Total euro-denominated claims on non-euro area residents||438||620|
|Securities received under repurchase agreements||18,319||14,210|
|Other including loans||339||5,207|
|Accrued interest receivable||6||-2|
|Total other euro-denominated loans to euro area credit institutions||18,665||19,415|
Note 6: Euro‑denominated securities issued by euro area residents
A7.1 “Securities held for monetary policy purposes”
In addition to securities held under conventional monetary policy measures, this item includes securities purchased by the Banque de France under the asset purchase programmes organised by the Eurosystem since 2009. These are purchased within the scope of the securities markets programme (SMP),26 the second and third corporate bond purchase programmes (CBPP2 and CBPP3),27 the public sector purchase programme (PSPP)28 and the corporate sector purchase programme (CSPP).29 Since March 2020, this item has also included securities purchased within the scope of the pandemic emergency purchase programme (PEPP).30 The ECB is responsible for the asset-backed securities purchase programme (ABSPP).31
As at 31 December 2022, the ECB and euro area NCBs no longer had exposure under the ﬁrst and second covered bond purchase programmes (CBPP1 and CBPP2),32 as the last securities held under these programmes at the Eurosystem level matured during 2022.
During the first quarter of 2022, the Eurosystem conducted net purchases under the asset purchase programme (APP) at a monthly pace of EUR 20 billion on average. In March 2022, the ECB Governing Council revised the net purchase amounts, introducing a path from EUR 40 billion in April, EUR 30 billion in May and EUR 20 billion in June.33 In June 2022, the ECB Governing Council decided to end net asset purchases under its asset purchase programme (APP) as of 1 July 2022 while continuing to reinvest the principal payments from maturing securities until the end of February 2023.34
|Programme||Programme start date||Programme end date||Risk-sharing between NCBs and the Eurosystem||Universe of eligible securities|
|CBPP1||July 2009||June 2010||No risk-sharing||Covered bonds
of euro area residents
|CBPP2||November 2011||October 2012||No risk-sharing||Covered bonds
of euro area residents
|SMP||May 2010||September 2012||Risk-sharing based on the key for subscription of the ECB’s capital||Private and public debt securities issued
in the euro areaa
|Asset purchase programme (APP)|
|ABSPP||November 2014||Active||Risk-sharing based on the key for subscription of the ECB’s capital Purchases borne by the ECB||Purchases
of asset-backed securities
|October 2014||Active||Risk-sharing based on the key for subscription of the ECB’s capital||Covered bonds
of euro area residents
|PSPP||March 2015||Active||Risk-sharing based on the key for subscription of the ECB’s capital on securities issued by supranational bodies
No risk-sharing on government bonds acquired by NCBs
|Euro area public sector bonds|
|CSPP||June 2016||Active||Risk-sharing based on the key for subscription of the ECB’s capital||Bonds and commercial paper issued by non-bank corporations established in the euro area|
|Pandemic emergency purchase programme (PEPP)|
|PEPP||March 2020||Active||Follows APP asset rules||All asset categories eligible under the APP|
a Only public debt securities issued by ﬁve euro area states were purchased under the SMP.
|Amortised cost||Market price||Amortised cost||Market price||Amortised cost||Market price|
|Total completed programmes||205||235||1,873||1,953||-1,668||-1,718|
|Asset purchase programme (APP)|
|PSPP – issued by French public bodies||452,372||397,077||437,218||452,601||15,154||-55,524|
|PSPP – issued by supranational bodies||76,085||63,378||71,435||72,641||4,650||-9,263|
|Pandemic emergency purchase programme (PEPP)|
|PEPP‑PSPP – issued by French public bodies||262,463||216,616||246,322||243,518||16,141||-26,902|
|PEPP‑PSPP – issued by supranational bodies||43,214||33,544||41,038||40,257||2,176||- 6,713|
|Accrued interest receivable||5,653||5,482||170|
Thereafter, APP portfolios should decline at a measured and predictable pace as the Eurosystem will not reinvest all of the principal payments from maturing securities. On 15 December 2022, the ECB Governing Council decided that this decline would amount to EUR 15 billion per month on average from the beginning of March 2023 to the end of June 2023. Its subsequent pace will be determined over time. The ECB Governing Council will regularly reassess the pace of the APP portfolio reduction to ensure it remains consistent with the overall monetary policy strategy and stance, to preserve market functioning, and to maintain ﬁrm control over short-term money market conditions.
Furthermore, the Eurosystem continued net asset purchases under the pandemic emergency purchase programme (PEPP) during the ﬁrst quarter of 2022, albeit at a slower pace than in the previous quarter, in accordance with the ECB Governing Council decision of December 2021.35 Based on the same decision, net asset purchases under the PEPP were discontinued at the end of March 2022, although the ECB Governing Council intends to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2024. The ECB Governing Council will continue to apply ﬂexibility in its reinvestments with a view to countering risks to the monetary policy transmission mechanism related to the pandemic. The future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.
The variation in the amortised cost of securities held for monetary policy purposes between 2021 and 2022 is shown in the table on the next page.
These securities are tested for impairment at the Eurosystem level on the basis of available information and an estimate of recoverable amounts at the balance sheet closing date. Based on the results of the tests carried out as at 31 December 2022, no impairment loss in respect of the portfolios held by the Eurosystem for monetary policy purposes (with an amortised cost, excluding accrued interest, of EUR 4,937 billion) was recognised in the ﬁnancial statements.
|Total completed programmes||1,873||0||-1,635||-32||205|
|Asset purchase programme (APP)|
|PSPP – issued by French public bodies||437,218||52,837||-39,872||2,188||452,372|
|PSPP – issued by French public bodies||71,435||9,645||-4,895||-101||76,085|
|Pandemic emergency purchase programme (PEPP)|
|PEPP-PSPP – issued by French public bodies||246,322||31,185||-13,782||-1,262||262,463|
|PEPP-PSPP – issued by supranational bodies||41,038||8,918||-6,603||-139||43,214|
a Amortisation of mark-ups/mark-downs corresponding to the difference between the acquisition price and the redemption price of securities, which is spread over their remaining lives on a discounted basis, and the impact of indexing the redemption value of securities to inﬂation.
A7.2 “Other securities”
This item includes euro-denominated securities issued by euro area residents, other than those held for monetary policy purposes or for the Banque de France Employee Reserve Fund, or those that are speciﬁcally earmarked against the Banque de France’s own funds or against customer deposits that are recorded in asset items A7.1, A11 and A12 (see Notes 6, 9, 10 and 26).
Just as for portfolios of monetary policy securities, impairment tests are also carried out on the Banque de France’s other portfolios. Based on these tests, it was concluded that no impairment was needed.
|Securities held to maturitya||28,464||28,562|
|Accrued interest receivable||346||426|
a In 2022, there were no sales of securities held to maturity.
Note 7: Claims arising on the transfer of reserve assets to the ECB and other claims on the Eurosystem
A8.2 “Claims arising on the transfer of reserve assets to the ECB”
Pursuant to Article 30.2 of the Statute of the ESCB, the euro area NCBs transferred foreign exchange reserve assets to the ECB in proportion to their share of the ECB’s subscribed capital. Item A8.2 corresponds to the Banque de France’s claim against the ECB resulting from this transfer. It is adjusted each time the allocation of the ECB’s subscribed capital among euro area NCBs is changed. The last such adjustment took place in 2020 as part of the Bank of England’s withdrawal from the ESCB.
|Claims arising on the transfer of reserve assets to the ECB||8,240||8,240|
|Accrued interest receivable||41||0|
Claims are remunerated at the marginal rate applied to main reﬁnancing operations, adjusted to reﬂect a zero return on the gold component of the transferred reserve assets.
A8.4 “Other claims on the Eurosystem”
At the end of 2021, asset item A8.4 covered the Banque de France’s net claim on the Eurosystem generated by transfers via the TARGET2 payment system with other ESCB NCBs. The Banque de France’s net position in TARGET2 was a creditor at the end of 2022 and is thus recognised as a liability in item L7 (see Note 15).
Item A8.4 also included the claim on the interim dividend paid by the ECB at the end of 2021. With regard to 2022, given its performance outlook, the ECB Governing Council decided not to distribute the income from banknotes in circulation or from monetary policy securities held by the ECB under the SMP, CBPP3, ABSPP, PSPP and PEPP programmes (see paragraph on the dividend paid by the ECB in the section on accounting principles and valuation methods). Consequently, no receivables in this respect have been recognised in the Banque de France’s ﬁnancial statements as at 31 December 2022.
|Claims on the Eurosystem (TARGET2)||0||25,847|
|ECB interim dividends||0||31|
Note 8: Advance to the IEDOM
The circulation of banknotes in the French overseas departments and the French overseas collectivities of Saint Pierre and Miquelon, Saint Barthélemy and Saint Martin is managed by the Institut d’émission des départements d’outre-mer (IEDOM – the French overseas departments’ note-issuing bank) in the name of, on behalf of and under the authority of the Banque de France, of which it is a subsidiary.
To this end, the Banque de France grants the IEDOM a non-interest-bearing advance for an amount equivalent to a percentage of France’s euro banknote allocation, which, since 1 July 2007, has been calculated according to the allocation mechanism in force within the Eurosystem.
Note 9: Other euro and foreign currency denominated financial assets
Asset item A11 notably includes securities and other assets earmarked against the Banque de France’s own funds, provisions and customer deposits recorded in liability items L4 and L10.
|Debt securities held to maturityab||65,133||69,681|
|Accrued interest receivable||38||2|
a in 2022, none of these securities were transferred to another portfolio
b Collateralised securities earmarked against customer deposits: EUR 63,479 million of which EUR 55,546 million of foreign currency denominated securities.
|Debt securities held to maturity|
|Foreign currency denominated securities||55,546||57,503|
|Accrued interest receivable||20||-26|
|Net balance sheet value||65,153||69,655|
|Equities and investment fund unitsab|
|Collective investment funds||6,712||6,497|
|Other variable-yield securities||640||649|
|Net balance sheet value||7,352||7,146|
a The revalued securities are marked to market on the last business day of the year.
b The cost price of the equities and investment fund units at year-ends 2021 and 2022 was EUR 5,006 million and EUR 5,660 million, respectively.
Note 10: Other items
Asset item A12, “Other items”, includes all the securities portfolios held in the Caisse de réserve des employés de la Banque de France (CRE – the Banque de France Employee Reserve Fund), whose investments are reported at their year-end market value. “Other adjustment accounts” at the end of 2021 reﬂected the impact of the revaluation of off-balance sheet foreign currency positions held in relation to transactions with customers. As it is a credit balance as at the end of 2022, it is reported in liability item L11 (see Notes 19 and 26).
|Other items including CRE portfolios||11,394||12,392|
|Accruals and deferred expenses||722||2,604|
|Other adjustment accounts||1||2,208|
Note 11: Fixed assets and participating interest in the ECB
The Banque de France has not granted any loans or advances to its subsidiaries with the exception of the IEDOM, which has received an advance of EUR 7.5 billion as part of its euro banknote circulation activity on behalf of the Banque de France in the French overseas departments and collectivities that fall within its scope of intervention (see Note 8). Furthermore, the Banque de France has not provided any securities or guarantees for material amounts to these entities.
31 December 2021
|Increasea||Decreasa||31 December 2022|
|Participating interest in the ECB (balance sheet value)||1,777||125||-||1,901|
|Participating interests other than the ECB (gross value)||686||-||-||686|
|Intangible ﬁxed assets (gross value)||922||179||103||997|
|Amortisation and impairment||617||73||1||689|
|Net value of intangible ﬁxed assets||305||106||102||308|
|Tangible ﬁxed assets (gross value)||2,522||637||619||2,540|
|Depreciation and provisions||1,531||90||60||1,561|
|Net value of tangible ﬁxed assets||991||547||559||979|
|Total tangible and intangible ﬁxed assets (net balance sheet value)||1,295||653||661||1,287|
a Increases and decreases also include transfers between ﬁxed asset accounts.
|Name||Headquarters||Asset item||Capital||Share of capital held (%)||Reserves and retained earnings before appropriation of net proﬁtc||Net profit||Book valued||Pre-tax turnover for the period or equivalente||Dividends received in 2022|
|European Central Banka||Frankfurt, Germany||A 8.1||10,825||20.42||43,123||0||1,901||900||9|
|IDEOM||Paris, France||A 13.2||33.5||100.00||123||9||149||53||8|
|Bank for International Settlementsb||Basel, Switzerland||A 13.2||858||8.82||27,894||425||405||669||17|
|Europafi||Vic-le-Comte, France||A 13.2||133||99.00||19||-2||132||87||2|
|La Prévoyance immobilière||Paris, France||A 13.2||< 0.1||98.00||na||na||ns||na||0|
|Banque de France Gestion||Paris, France||A 13.2||0.6||99.99||8||7||ns||24||14|
ns: not signiﬁcant; na: not available.
a The share of capital held (capital key) referred to above corresponds to the Banque de France’s share out of all euro area member NCBs. Dividends are allocated on the basis of this key.
b Last ﬁnancial year-end at 31 March 2022, accounts prepared in SDR, EUR/SDR conversion rate as at 31 March 2022.
c Including revaluation accounts and provisions equivalent to reserves for the IEDOM, the European Central Bank and the Bank for International Settlements.
d Gross and net book value of the securities held as no provision has been recorded.
e Net interest income for the IEDOM, the European Central Bank and the Bank for International Settlements. Production sold for Europaﬁ and Banque de France Gestion.
Following a review of the materiality criteria for these subsidiaries at Banque de France level, none of these entities have been consolidated since 2019.
Participating interest in the ECB
Pursuant to Article 28 of the Statute of the ESCB, the capital of the ECB is held solely by ESCB NCBs. The key for subscription of the ECB’s capital is set under the conditions deﬁned in Article 29 of the Statute of the ESCB, based on the various countries’ share in the total population and gross domestic product of the European Union. These two determinants have equal weighting. The ECB adjusts this capital key every ﬁve years (the last ﬁve-yearly adjustment took place on 1 January 2019) and each time there is a change in the ESCB’s composition.
Since 31 January 2020, when the Bank of England withdrew from the ESCB, the Banque de France’s share in the ECB’s subscribed capital has been 16.6108%, as the Bank of England’s share of the ECB’s subscribed capital (EUR 10,825 million) was reallocated among both the euro area NCBs and the non-euro area NCBs.
On the day of the Bank of England’s withdrawal from the ESCB, the ECB’s paid up capital remained unchanged at EUR 7,659 million as the remaining NCBs covered the Bank of England’s paid-up capital of EUR 58 million. In addition, the ECB Governing Council decided that the euro area NCBs would be required to pay up their increased subscriptions to the ECB capital following the Bank of England’s withdrawal in full in two annual instalments in 2021 and 2022.36 As a result, the Banque de France made two transfers of EUR 124.6 million each to the ECB in December 2021 and December 2022. At 31 December 2022, the Banque de France’s share of the ECB’s paid-up capital amounted to EUR 1,798.1 million.
|Until 31 Dec. 2003||From 1 May 2004 to 31 Dec. 2006||From 1 Jan. 2007 to 31 Dec. 2008||From 1 Jan. 2009 to 30 June 2013||From 1 July 2013 to 31 Dec. 2013||From 1 Jan. 2014 to 31 Dec. 2018||From 1 Jan. 2019 to 31 Jan. 2020||From 1 Feb. 2020|
In addition to the Banque de France’s share of the ECB’s paid-up capital, the participating interest in the ECB, which amounted to EUR 1,901 million at 31 December 2022, includes the net amounts paid by the Banque de France as a result of the increase in its share of the ECB’s equity value37 resulting from all previous ECB capital key adjustments.
Participating interest in the IEDOM
Since 1 January 2017, the Banque de France has held 100% of the capital of the IEDOM. The IEDOM is responsible, on behalf of the Banque de France, for implementing its missions of monetary strategy, ﬁnancial stability and services to the economy and society in the regions that fall within the scope of its intervention.
The IEDOM is thus notably responsible for issuing and managing the circulation of banknotes and coins, rating companies so that private loans can be mobilised as part of Eurosystem reﬁnancing operations, supervising payment systems and means, providing the secretariat of the household debt commissions, managing local interbank registers and providing services of general interest to public or private bodies.
Participating interest in Europafi
In 2015, the Banque de France spun off its paper business within Europaﬁ. At 31 December 2022, the Banque de France had a 99% holding in Europaﬁ; the Banca d’Italia, the Oesterreichische Nationalbank, and the Banco de Portugal had stakes of 0.5%, 0.25% and 0.25%, respectively.
Participating interest in BDF Gestion
BDF Gestion, the Banque de France’s 99.99%-owned asset management subsidiary, manages a wide range of collective investment schemes as well as individual mandates for institutional investors.
Note 12: Banknotes in circulation
Euro banknotes in circulation increased by 1.8% from 2021 to 2022.
Note 13: Other euro‑denominated liabilities to euro area credit institutions
Liability item L3 is made up of securities purchased for monetary policy purposes delivered under repurchase agreements. Since 2021, this item has also included funds that are not freely available to credit institutions.
|Euro-denominated liabilities to euro area residents||26,977||28,162|
|Accrued interest payable||7||0|
Note 14: Euro‑denominated liabilities to non‑euro area residents
This item comprises euro credit balances and ﬁxed-term deposits (excluding TARGET2) with non-euro area central banks, commercial banks and non-ﬁnancial customers in non-Eurosystem member countries. In most cases the assets offsetting these liabilities are included either in asset items A4 or A6 (see Note 5) or in asset item A11 (see Note 9), depending on whether they are invested in the same currency or are covered by cross-currency swaps (see Note 26).
|Euro-denominated liabilities to non-euro area residents||49,470||70,862|
|Accrued interest payablea||74||-22|
a In the ﬁnancial statements for the year ended 31 December 2021, the negative balance for accrued interest payable of EUR 22 million at year-end 2021 was recorded within “Euro-denominated liabilities to non-euro area residents”.
Note 15: Euro‑denominated liabilities to the Eurosyste
In 2022, euro-denominated liabilities to the Eurosystem were made up of:
- the Banque de France’s net creditor position in TARGET2, which had been recognised in asset item A8 in 2021 due to its debit balance (see Note 7);
- accrued interest payable related to the remuneration of the TARGET2 position at the main reﬁnancing rate;
- accrued expenses in respect of the pooling of monetary income.
|Euro-denominated liabilities to the Eurosystem (TARGET2)||14,531||0|
|Accrued expenses in respect of the pooling of monetary income||94||627|
|Accrued interest payable||175||0|
Note 16: Euro‑denominated liabilities to other euro area residents
Liability item L8.1, “Liabilities vis-à-vis the state and government agencies”, consists of the following.
- The Treasury’s account, which earned interest at the following rates in 2022:38
- until 13 September 2022, when the deposit facility rate became positive, remuneration on the basis of the euro short-term (€STR) rate up to a capped amount39 and then, above this amount, on the basis of the deposit facility rate;
- as from 14 September 2022, remuneration at the €STR rate up to the capped amount mentioned above and then, above this amount, at the lower of the deposit facility rate and the €STR rate.
- The accounts of other government agencies, as well as deposits from certain international bodies.
Liability item L8.2, “Other liabilities”, includes the euro-denominated current accounts of resident institutional customers (other than the state and government agencies), and also the IEDOM’s current account.
|P8.1 Liabilities vis-à-vis the state
and government agencies
|P8.2 Other liabilities||11,752||59,271|
|Accrued interest payable||102||1|
Note 17: Items in the course of settlement
Liability item L9, “Items in the course of settlement”, includes balances (primarily cheques) debited or credited to a customer’s account, but not yet credited or debited to a credit institution’s account, and vice versa.
Note 18: Banking transactions
This item mainly comprises overnight and ﬁxed-term foreign currency denominated deposits from French or foreign public bodies, or foreign central banks. The management of these foreign currency transactions is entirely separate from the management of foreign exchange reserves. The assets offsetting these liabilities, which may be hedged by cross-currency swaps, are included either in asset item A11 (see Note 9), or in asset items A4 or A6 (see Note 5), depending on whether they are invested in a foreign currency or in euro.
Note that euro-denominated deposits made by institutional customers (other than monetary and ﬁnancial institutions) are recorded in liability item L8.2.
|Other banking transactions o/w ﬁxed-term deposits||94,449||124,638|
|Accrued interest payable||435||165|
Note 19: Other items
This item mainly includes:
- the capital of the Banque de France Employee Reserve Fund (see Note 28);
- miscellaneous creditors and the impact of the revaluation of off-balance sheet foreign currency positions in relation to transactions with customers, whose impact on the proﬁt and loss account is neutralised by the revaluation of foreign currency positions in the balance sheet – the overall foreign currency position from these transactions is close to zero (see Note 26).
|Other adjustment accounts||0||5|
Note 20: Provisions for liabilities and charges
Provisions for liabilities and charges mainly include employee-related provisions:
- provisions for restructuring allocated as part of the Banque de France’s modernisation programmes and plans to adapt its activities, corresponding to the full coverage of additional seniority granted under early retirement schemes;
- provisions for changing the age pyramid, relating to an early retirement incentive scheme for employees reaching the end of their working life;
- provisions for retirement beneﬁts;
- a provision covering the Banque de France’s commitment to fund part of retirees’ supplementary health insurance contributions;
- provisions for various social liabilities for working employees (death beneﬁts, long-service medals, end-of-career leave, extended sick leave and pensions for industrial injuries);
- provisions to cover various social obligations granted to retired employees (death beneﬁts, etc.);
- other provisions, particularly for major repairs (such as façade repairs, renovations, etc.).
For discounted social security provisions, the parameters used are as follows: a discount rate of 3% (2.25% in 2021) and pension and salary revaluation assumptions based on long-term inﬂation of 2% (1.75% in 2021).
|Provisions for restructuring and changing the age pyramid||130||0||7||123|
|Provisions for retirement beneﬁts||128||13||15||126|
|Provision for supplementary health insurance||159||0||15||144|
|Other miscellaneous provisions – current employees||93||18||21||89|
|Other miscellaneous provisions – retirees||159||0||13||146|
|Provision related to monetary policy operations||0||0||0||0|
Note 21: Revaluation accounts
Gold and foreign currency assets and liabilities were revalued at the reference prices indicated by the ECB on 30 December 2022.
The revaluation rates used at 30 December 2022 for gold and the main currency holdings were:
- EUR 54,852 per kilogram of ﬁne gold (compared with EUR 51,746 per kilogram at end-2021);
- EUR 1 = USD 1.0666 (compared with USD 1.1326 at end-2021);
- EUR 1 = SDR 0.7989 (compared with SDR 0.8091 at end-2021);
- EUR 1 = AUD 1.5693 (compared with AUD 1.5615 at end-2021).
The increase in the balance of item L13 is mainly the result of a signiﬁcant rise in the price of gold and the value of the US dollar against the euro. The downturn in equity markets and the impact of rising interest rates on bonds explain the decrease in unrealised capital gains on euro-denominated and foreign currency denominated securities portfolios.
|Revaluation accounts – gold||114,254||106,688|
|Revaluation accounts – foreign currency||9,357||6,835|
|Revaluation accounts – securities and ﬁnancial futures||2,932||5,188|
Note 22: Fund for general risks
An allocation of EUR 4,412 million was made to the fund for general risks in respect of 2022 based on an analysis of the potential risks associated with exposures at the balance sheet closing date and future expenses related to remunerating excess liquidity within the Eurosystem.
Note 23: Revaluation reserve for state gold and foreign exchange reserves
See Note 30 and the comments on the RRRODE in the section on valuation methods.
Note 24: Capital, reserves and retained earnings
|Long-term capital gains||100||100|
|Special pension reserve fund (see Note 28)||2,957||4,074|
a In accordance with Article R. 144-4 of the French Monetary and Financial Code, 5% of the net proﬁt for the year is allocated to a special reserve that ceases to be funded when it reaches an amount equal to double the Banque de France’s capital.
b Other reserves include the investment reserve and the fonds d’assurance contre les sinistres (FAS – the insurance fund to cover claims against the Banque de France). In accordance with Article R. 144-2 of the French Monetary and Financial Code, the Banque de France must maintain reserves to ﬁnance its investments. The Banque de France is also its own insurer with respect to civil liability risks, claims on property it owns and damages to its property by third parties. Expenses of almost EUR 1 million will be charged to the FAS in 2023 in respect of an incident at the Chamalières site in 2022.
Note 25: Interest rate financial futures and securities commitments
|Outright transactions on organised markets|
|Foreign currency denominated interest rate contracts|
|Euro-denominated interest rate contracts|
|Over-the-counter market operations|
|Foreign currency denominated interest rate swaps||173||163|
|Euro-denominated interest rate swaps||0||0|
At the end of 2022, the Banque de France had also committed EUR 274 million to subscriptions for investment fund units in connection with the investment of its equity and Employee Reserve Fund resources.
Note 26: Forward foreign currency transactions
As part of its forward foreign currency transactions with customers, the Banque de France collects euro-denominated deposits from non-euro area residents, in particular foreign central banks and international bodies, which are recorded in liability item L4. The Banque de France also collects foreign currency denominated deposits, mainly from non-resident institutions, which are recorded in liability item L10.
These euro or foreign currency denominated deposits are invested either in the same currency or in a different currency (euro-denominated investments are recorded in asset items A4 or A6 depending on the counterparty’s area of residence, while foreign currency investments are recorded in item A11). When appropriate, foreign currency risk is neutralised by cross-currency swaps of the same amount and maturity as the deposits. These foreign currency deposits and investments, and the related spot and forward foreign currency transactions, form part of an activity that is separate and independent from the management of foreign exchange reserves. Consequently, they are recorded in dedicated accounts separate from those used for the management of foreign exchange reserves, and are valued in accordance with the standards issued by the ANC (see “Foreign currency gains and losses other than on gold and foreign exchange reserves” in the valuation methods section above).
Amounts of foreign currency receivables and deliverables in respect of transactions carried out with customers are detailed in the following table.
|Euro to be received against foreign currency
to be delivered
|Foreign currency deliverable||15,774||19,477|
|Foreign currency to be received against euro
to be delivered
|Foreign currency receivable||12,126||24,623|
|Foreign currency to be received against foreign currency to be delivered||91,684||113,157|
|Foreign currency to be delivered against foreign currency to be received||92,639||110,855|
The amounts of foreign currency receivables and deliverables resulting from foreign exchange reserve management operations each amounted to EUR 1.1 billion.
Note 27: Off‑balance sheet commitments given or received in respect of operations with the IMF
Commitments given by the Banque de France
Based on the Banque de France’s quota in the IMF’s capital, additional drawing rights of SDR 18.4 billion are still available.
The credit line granted to the IMF within the framework of the New Arrangements to Borrow (NAB) amounts to SDR 18.9 billion,40 SDR 0.1 billion of which was drawn down at 31 December 2022. Additional drawdowns of SDR 18.8 billion can still be made.
A bilateral loan agreement between France and the IMF was signed in October 2012 and has since been renewed. Under this agreement, France undertakes to provide further ﬁnancing of EUR 13.5 billion.41 This credit line has not been used.
The Banque de France grants loans to the Poverty Reduction and Growth Trust (PRGT) under the IMF’s “Poverty Reduction and Growth Facility” and “Exogenous Shocks Facility” (PRGF-ESF). The ﬁrst loan agreement for SDR 1.3 billion came to an end on 31 December 2018. In February 2018 and then in July 2020, two new loan agreements were put in place for a total of SDR 4 billion. A further loan agreement for SDR 1.0 billion was agreed in December 2022. At the end of December 2022, the additional drawdowns that could be made amounted to SDR 3.8 billion.
Commitments received by the Banque de France
In the 2009, 2018 and 2022 budget acts and the 2020 supplementary budget act, the state extended its guarantee to the loans granted by the Banque de France to the PRGT.
Note 28: Pension liabilities
Banque de France employees benefit from a pension scheme, governed by Decree 2007-262 of 27 February 2007 (amended), aligned with that of the civil service.
The Employee Reserve Fund
The Banque de France pension fund, known as the Caisse de réserve des employés de la Banque de France (CRE – the Banque de France Employee Reserve Fund), is designed to service the pensions of its statutory employees. The CRE does not have a legal personality distinct from that of the Banque de France. It constitutes, as the French Council of State set out in its decisions of 5 November 1965 and 28 April 1975, “a means for the Banque de France to manage itself assets that are assigned to a special purpose and whose separate ﬁnancial identity has been recognised with the sole purpose of showing the results of this management in a special account”.
Consequently, the CRE is subject to separate accounting treatment but its assets, liabilities, income and expenses form an integral part of the Banque de France’s ﬁnancial statements.
The securities posted in assets on the CRE’s balance sheet are recorded in asset item A12 of the Banque de France balance sheet and are recognised in accordance with the rules set out in the section on valuation methods used for securities portfolios.
CRE capital is shown in liability item L11, “Other items”. Realised gains and losses, unrealised losses and employee contributions paid that are recognised in the proﬁt and loss account require a matching allocation to or reversal from CRE capital. The same applies to any depreciation recognised by way of provisions for debt securities held to maturity and for non-marketable investment fund units. On the liabilities side, item L13 also includes revaluation differences for CRE securities that have been revalued. The special pension reserve fund (see below) is shown under item L17, “Capital, reserves and retained earnings”.
Pension expenses not ﬁnanced by a deduction from the special pension reserve fund or from the CRE’s capital (see below) are included in profit and loss item 2.2, “Pensions and related expenses”. Income from the CRE’s securities portfolios is recorded in proﬁt and loss item 1.6, “Other income and expenses, net”.
Various sources of pension financing
Pensions paid to retired employees are funded:
- by interest income and dividends from the CRE’s securities portfolios;
- by a deduction from the special pension reserve fund established in 2007 by the Banque de France’s General Council to ensure the progressive ﬁnancing of the unfunded portion of pension liabilities;42
- by the use of CRE capital;
- by a balancing subsidy paid by the Banque de France.
The other beneﬁts paid by the CRE43 are covered by a subsidy paid by the Banque de France.
Articles 3 and 4 of General Council Order No. A-2017-10 of 20 December 2017 on the CRE’s ﬁnancial management provide that use of the special pension reserve fund and CRE capital to ﬁnance the pensions to be paid during a year shall be decided by the General Council when voting on the Banque de France budget. This decision was taken in view of the level of coverage of pension liabilities by the CRE’s securities portfolios.
Furthermore, General Council Order No. 2020-02 of 19 June 202044 speciﬁes that this authorisation may be given to service the pensions of the following ﬁnancial year insofar as, at the time of the General Council vote on the relevant budget, the pension liabilities entered into by the Banque de France are fully covered or are covered taking the future distribution of net proﬁt into due consideration.
With regard to 2022, as pension liabilities were not fully covered, the proportion of statutory pensions that exceeded income from portfolios was funded by a balancing subsidy paid by the Banque de France.
It should be noted that pension liabilities were fully covered by CRE’s securities portfolios at the end of 2020 and 2021. Consequently, the statutory pensions paid in 2020 and 2021 were ﬁnanced by deductions from the special pension reserve fund of EUR 471 million and EUR 473 million, respectively.
Furthermore, the General Council decided to repay the amount of CRE assets (at market value) that exceeded total pension liabilities at the end of 2020 and 2021 (EUR 690 million and EUR 1,117.6 million, respectively) to the state in the form of a partial distribution from the special pension reserve fund.
In addition, liabilities in respect of the additional seniority granted as part of restructuring plans (see Note 20) are provisioned in full.
|o/w to current employees||3,881||4,356|
|o/w to retirees||9,655||9,783|
|Liabilities in respect of the additional seniority granted as part of restructuring plans||123||130|
|Total gross liabilities||13,659||14,269|
|o/w to Employee Reserve Fund||8,651||8,255|
|o/w to special pension reserve fund||2,957||4,074|
Total pension liabilities have been calculated in accordance with actuarial standards (using the projected unit credit method), taking into account all current employees, retirees and their dependants. Liabilities to current employees were determined using a prospective method with assumptions concerning future career and salary developments.
The TGH-TGF 2005 statutory mortality tables applicable to life insurance contracts were used to calculate pension liabilities at 31 December 2022.
Calculations of pension liabilities and the underlying assumptions used are validated and monitored by the Banque de France’s actuaries. A discount rate of 3% was applied in 2022 compared with 2.25% in 2021. Pension and salary revaluation assumptions based on long-term inﬂation rose to 2% from 1.75% in 2021 (see Note 20).
Profit and loss account
Note 29: Net interest income
Net interest income for 2022 amounted to EUR 7.5 billion, up year-on-year from EUR 6.7 billion.
Although the 2022 ﬁnancial year was strongly impacted by the ongoing normalisation of monetary policy and the associated recognition of interest expenses as part of the remuneration of deposits recorded as Banque de France liabilities, net interest income rose by EUR 730 million. This is due to the decrease in accrued interest calculated on TLTRO III operations (see Note 4 on calculation methods) and the increase in income from inﬂation-indexed securities held for monetary policy purposes. Furthermore, income from foreign currency and euro reserve assets increased compared with 2021.
|Interest on foreign currency assets||3,683||1,485|
|Interest on reserve assets (excluding the IMF)||1,449||963|
|Interest on ﬁnancing provided to the IMF||539||14|
|Interest on euro-denominated assets||13,184||10,321|
|Monetary policy securities||8,451||4,093|
|Interest levied on ﬁnancial institutions’ accounts||2,523||4,164|
|Securities earmarked against reserves||663||898|
|Interest levied on the Treasury’s account||426||536|
|Interest on claims arising on the transfer
of reserve assets to the ECB
|Interest on claims on the ECB with regard
|Total interest and related income (A)||16,869||11,806|
|Interest on foreign currency liabilities||-666||-102|
|Interest on foreign currency reserve liabilities||-16||0|
|Interest on SDR allocations||-456||-11|
|Interest on euro-denominated liabilities||-8,745||-4,976|
|Interest on bank reﬁnancing operations||-2,275||-4,585|
|Interest on ﬁnancial institutions’ accounts||-3,986||0|
|Interest paid on the Treasury's account||-269||0|
|Interest on TARGET2 positions||-602||0|
|Total interest and related expenses (B)||-9,411||-5,078|
|Net interest income (A + B)||7,458||6,728|
Note 30: Net income from financial transactions
This proﬁt and loss item includes the net gains and losses resulting from sales of ﬁnancial instruments held by the Banque de France as well as unrealised losses on gold, foreign currency and ﬁnancial instrument revaluations. It also includes net foreign currency gains and losses arising on foreign currency denominated transactions.
In 2022, net realised gold and foreign currency gains and losses represented a gain of EUR 283 million. In accordance with the agreement of 20 December 2010 between the state and the Banque de France on the management of and accounting for state foreign exchange reserves, this net balance and the unrealised foreign exchange losses on reserve currencies of EUR 48 million were allocated to the RRRODE, with the corresponding entry taken to the proﬁt and loss account (item 1.2.2).
|Net gain/loss on foreign currency denominated securitiesabc||-376||14|
|Net gain/loss on euro-denominated securities recorded in items A7.1 and A7.2bcd||-74||26|
|Net gain/loss on available-for-sale securities recorded in item A11b||-14||38|
|Net foreign currency gains and losses (excluding foreign exchange reserve management)||17||12|
a Excluding the impact of foreign exchange ﬂuctuations, recorded in proﬁt and loss item 1.2.1.
b These items include realised gains and losses, and unrealised losses at year-end.
c These items also include margin calls on interest rate ﬁnancial futures, and proﬁts and losses on synthetic instruments.
d In 2022, this item includes expenses of EUR 26 million from the early redemption of securities initiated by the issuer at a price below nominal value. It also includes capital gains on disposal of EUR 1 million from sales intended to ensure compliance with limits.
Note 31: Income from equity securities and participating interests
For 2022, this item includes the balance of the dividend distributed by the ECB from its net proﬁt for 2021. However, given its performance outlook for 2022, the ECB Governing Council decided not to distribute the income from banknotes in circulation or from monetary policy securities held by the ECB under the SMP, CBPP3, ABSPP, PSPP and PEPP programmes (see paragraph on the dividend paid by the ECB in the section on accounting principles and valuation methods).
|ECB dividend (ﬁnal for the previous ﬁnancial year and interim dividend for the current ﬁnancial year)||9||109|
|Dividends from other participating interests||40||49|
Note 32: Net result of pooling of monetary income
This item contains the net result of pooling of monetary income, recorded in proﬁt and loss item 1.5. For 2022, it amounted to an expense of EUR 102 million. It also contains prior-year adjustments related to the 2020 and 2021 ﬁnancial statements following the availability of the rates applicable to TLTRO III operations for the additional special interest rate period from 24 June 2021 to 23 June 2022 (see Note 4).
|Monetary income pooled by the Banque de France||-1,559||-897|
|Monetary income allocated to the Banque de France||1,457||239|
|Net result of pooling of monetary income in 2022||-102||-658|
|Other expenses and income arising from the pooling of monetary income||8||31|
|Net provisions/reversals related to monetary policy operations||_||_|
Note 33: Other income and expenses, net
This balance includes income and expenses generated by service activities carried out on behalf of third parties. These activities mainly relate to public service activities entrusted to the Banque de France by law or by agreements signed with the state and, to a lesser extent, activities carried out in support of the economy, for which the cost is re-invoiced.
Income includes levies for supervisory expenses by the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority), which was established by Order 2010-76 of 21 January 2010 merging the licensing and supervisory authorities of the banking and insurance sectors.
The monetary income pooled by the Eurosystem is allocated between NCBs in proportion to their subscription of the
The monetary income of each NCB reﬂects the income derived from the earmarkable assets held against its liability base.
The liability base includes banknotes in circulation, euro-denominated liabilities to euro area credit institutions related to monetary policy operations, intra-Eurosystem liabilities resulting from TARGET2 transactions, net intra-Eurosystem liabilities on euro banknotes in circulation within the Eurosystem, and, when applicable, the euro-denominated deposits of Eurosystem defaulted banking counterparties. Any interest accruing on liabilities included in the liability base is deducted from pooled monetary income.
Earmarkable assets include euro-denominated lending to euro area credit institutions related to monetary policy operations, securities held for monetary policy purposes, claims arising on the transfer of reserve assets to the ECB (excluding the gold component), net intra-Eurosystem claims resulting from TARGET2 transactions, net intra-Eurosystem claims arising on the distribution of euro banknotes within the Eurosystem, claims on the central banks that are not members of the Eurosystem relating to euro liquidity provision, accrued interest on securities held for monetary policy purposes whose risks and income are pooled and which have been written down, and a limited amount of gold in proportion to each NCB’s subscription of the ECB’s capital (capital key). When the value of an NCB’s earmarkable assets is different from the value of its liability base, the contribution to monetary income of this gap is taken into account by applying to it the marginal rate of main reﬁnancing operations.
|Remuneration for services provided to the state||218||222|
|Payments for ACPR supervisory expenses||205||205|
|Total other income (A)||1,464||795|
|Total other expenses (B)||-705||-84|
|Other income and expenses, net (C = A + B)||757||710|
a This item mainly includes fees charged for use of the databases managed by the Banque de France (FNCI, FICP, FCC and FIBEN).
The ACPR is a ﬁnancially autonomous, independent administrative authority without legal personality, chaired by the Governor of the Banque de France and as such its budget is a sub-budget of the Banque de France. The expenses and income of the ACPR are recognised in the ﬁnancial statements of the Banque de France. Expenses are booked as operating expenses according to their nature, and income consists of levies raised from the organisations under ACPR supervision. In 2022, levies for supervisory expenses generated income of EUR 205 million.
Services provided by the Banque de France to the state – particularly the operation of the departmental commissions for handling cases of household overindebtedness, and the management of the Treasury’s account – are remunerated on a full-cost basis.
Note 34: Staff costs and related expenses
With effect from these 2022 ﬁnancial statements, social security contributions include employer contributions in respect of the pensions of its statutory employees. In previous ﬁnancial statements, these contributions were allocated to the CRE’s capital as part of the distribution of the Banque de France’s net proﬁt.
The arrangements made to ﬁnance pension expenses are presented in Note 28, “Pension liabilities”.
|Salaries and wages||584||567|
|Taxes on salaries and wages||95||92|
|Social security contributions||294||164|
|Proﬁt-sharing and incentive plans||35||36|
|Total staff costs and related expenses||1,009||859|
|Pensions and related expenses||526||36|
|Total pensions and related expenses||526||36|
Total remuneration paid to management bodiesa
a The Banque de France’s management bodies are made up of members of the General Council and the Executive Committee. Remuneration comprises gross remuneration plus any payments in kind. The Banque de France staff representative and the censor are not remunerated for the duties they perform in the General Council.
The total gross remuneration of the Governor of the Banque de France for 2022 was EUR 293,652. The First Deputy Governor, Denis Beau, received EUR 237,671 and the Second Deputy Governor, Sylvie Goulard, received EUR 217,860 (up to her departure in early December). No employee accommodation is made available to them but they each receive a gross housing allowance of EUR 5,974 per month (subject to tax). These provisions are governed by Article R. 142-19 of the French Monetary and Financial Code.
Neither the Governor nor the Deputy Governors receive additional variable remuneration or the special purchasing power bonus.
Note 35: Corporate income tax
According to Article 8 of Law 2007-212 of 20 February 2007 on various measures concerning the Banque de France, the taxable proﬁt of the Banque de France is calculated using accounting rules deﬁned in accordance with Article L. 144-4 of the French Monetary and Financial Code and the agreement in Article L. 141-2 of the same Code.
|Income tax expense||1,067||1,895|
|On proﬁt before exceptional items||1,067||1,895|
Statutory Auditors’ report on the annual financial statements (year ended 31 December 2022)
KMPG S.A. (Tour EQHO, 2 avenue Gambetta, CS 60005, 92066 Paris La Défense Cedex)
Mazars (Tour Exaltis, 61 rue Henri Regnault, 92085 Paris La Défense Cedex)
In compliance with the engagement entrusted to us by your General Council, we have audited the accompanying annual ﬁnancial statements of the Banque de France for the year ended 31 December 2022.
In our opinion, the annual ﬁnancial statements give a true and fair view of the assets and liabilities and of the ﬁnancial position of the Banque de France as at 31 December 2022 and of the results of its operations for the year then ended in accordance with the accounting rules and principles set out in Article R. 144-6 of the French Monetary and Financial Code (Code monétaire et ﬁnancier).
Basis of our opinion
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are described in the “Statutory Auditors’ responsibilities for the audit of the annual ﬁnancial statements” section of our report.
We conducted our audit engagement in compliance with independence requirements of the French Commercial Code (Code de commerce) and the French Code of Ethics (Code de déontologie) for Statutory Auditors, for the period from 1 January 2022 to the date of our report.
Without qualifying our opinion, we draw your attention to the following matters:
- The introduction to the Notes to the annual ﬁnancial statements describes the accounting principles and valuation methods applicable to the Banque de France, some of which are speciﬁc to the European System of Central Banks.
- The General Council has determined the level of detail of the published ﬁnancial information in accordance with its right provided for in Article R. 144-6 of the French Monetary and Financial Code.
Justification of assessments
In accordance with the requirements of Articles L. 823-9 and R. 823-7 of the French Commercial Code relating to the justiﬁcation of our assessments, we inform you of the following matters that, in our professional judgement, were of most signiﬁcance in our audit of the ﬁnancial statements of the current period.
These matters were addressed in the context of our audit of the annual ﬁnancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on speciﬁc items of the annual ﬁnancial statements.
Valuation of securities at amortised cost
Your institution holds securities portfolios that are recognised at amortised cost. An impairment loss is recorded in the event of risk of non-recovery, in accordance with the methods described in the section on “Valuation methods – Securities portfolios” in the Notes to the annual ﬁnancial statements.
Our work consisted in reviewing the impairment tests put in place by the Banque de France to assess the risk of non-recovery, evaluating the assumptions used and examining the management procedures in place to approve these estimates.
Assessment of foreign currency denominated securities and assets and gold reserves
Your institution holds foreign currency denominated securities and assets and gold reserves. Gold and foreign currency positions are valued at year-end on the basis of the prevailing rates and prices on the last business day of the year. The accounting methods applied to foreign currency gains and losses and the effects of revaluations are set out in the note on “Valuation methods – Foreign currency transactions and resulting gains and losses” in the Notes to the annual ﬁnancial statements.
Our work consisted in checking the rates and prices used to revalue these positions and testing the key controls on allocations and reversals affecting the revaluation reserve for state gold and foreign exchange reserves.
Assessment of social obligations
Your institution calculates its social obligations in accordance with the methods described in Note 28 to the annual ﬁnancial statements. These obligations were assessed by an actuary.
Our work consisted in examining the data used and the assumptions applied when making these estimates.
Responsibilities of management and those charged with governance for the annual financial statements
Management is responsible for the preparation and fair presentation of the annual ﬁnancial statements in accordance with the accounting rules and principles set out in Article R. 144-6 of the French Monetary and Financial Code, and for such internal control as management determines is necessary to enable the preparation of annual ﬁnancial statements that are free from material misstatement, whether due to fraud or error.
In preparing the annual ﬁnancial statements, management is responsible for assessing the entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the entity or to cease operations.
The annual ﬁnancial statements were approved by the General Council.
Statutory Auditors’ responsibilities for the audit of the annual financial statements
Our role is to issue a report on the annual ﬁnancial statements. Our objective is to obtain reasonable assurance about whether the annual ﬁnancial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit performed in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements.
As speciﬁed in Article L. 823-10-1 of the French Commercial Code, our statutory audit does not include assurance on the viability of the entity or the quality of management of the entity’s affairs.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional judgement throughout the audit and furthermore:
- Identiﬁes and assesses the risks of material misstatement of the annual ﬁnancial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufﬁcient and appropriate to provide a basis for the audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control.
- Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the annual ﬁnancial statements.
- Assesses the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signiﬁcant doubt on the entity’s ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of the audit report. However, future events or conditions may cause the entity to cease to continue as a going concern. If the Statutory Auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the annual ﬁnancial statements or, if such disclosures are not provided or are inadequate, to modify the opinion expressed therein.
- Evaluates the overall presentation of the annual ﬁnancial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
Paris La Défense, 17 March 2023
The Statutory Auditors
KPMG S.A.: Marie-Christine Jolys, Partner
Mazars : Franck Boyer, Partner
1 The countercyclical capital buffer is a regulatory requirement imposed on bank capital, calibrated between 0% and 2.5% of risk-weighted assets. The buffer is designed to be increased during financial cycle upturns and relaxed during financial cycle downturns.
2 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.
3 Banque de France management indicators are assigned to individuals who perform or have performed the duties of a company senior manager (either as a legal representative, a partner in a legal entity, or as an individual entrepreneur).
4 Oms (M.), Alabergère (G.) and Ardisson-Khataoui (M.) (2022), “Changes in the financial position of start-ups in 2021”, Banque de France, July.
5 This scheme is helping to mitigate the effects of the Covid 19 pandemic and to build a greener, more digital and more resilient European economy.
6 OAT, French government bond. OATi, inflation-linked French government bond.
7 The tokenisation of a real asset is the conversion of the rights attached to it into a digital record. It is thus a way of digitally representing a real-estate asset, for example, or a bond, an intellectual copyright or even, in the future, a currency, so that it can then be exchanged using the blockchain. Once registered on the blockchain, the token can be exchanged within the community, and the entire history of the asset’s ownership can be traced via the blocks (Source: Banque de France, ABC de l’économie webpage).
8 SAM improves bank supervision by making it possible to detect unusual items in the reports submitted by supervised entities; DIXIT makes it easier to search for and view relevant content on regulations.
9 Central bank assets consist of medium and long-term securities remunerated at a fixed rate and purchased when interest rates were at a low. Central bank liabilities consiss of commercial bank deposits remunerated at variable rates. As interest rates are raised, the difference between the interest paid on deposits on the liabilities side and the interest earned on the securities held on the assets side increases, which should lead to a drop in central bank earnings (see chapter 7: "Financial management and accounts").
10 Waste and fugitive emissions data not yet available, data estimated at December 2022.
11 In accordance with Decree No. 2019 771 of 23 July 2019 on obligations to take action to reduce final energy consumption in tertiary buildings.
12 Use of the PEF 3.0 (Product Environmental Footprint) method, proposed by the European Commission and recommended by ADEME, and NegaOctet emissions factors to transcribe the environmental impact of the components of the Banque de France's information system. The multi-criteria analysis takes into account resource depletion, energy tensions, exposure to ionising radiation, etc.
13 Law of 24 December 2021 aimed at speeding up economic and workplace equality, known as the Rixain Act.
14 Article D. 1142-4 of the Labour Code provides for the publication of the results level obtained for five indicators. In 2021, it stood at 92/100 at the Banque de France.
15 Pensions are only financed by drawing on the special pension reserve or from the CRE’s capital to the extent that they continue to cover all future liabilities (see Note 28 to the financial statements). Note that in 2021, pensions had no impact on operating expenses as they were financed by drawing on the special pension reserve fund. Note also that the CRE asset surpluses in excess of pension liabilities at the end of 2020 and the end of 2021 were paid back to the state in the form of a distribution of part of the special pension reserve fund (EUR 1,808 million).
16 In accordance with Article R. 144-6 of the French Monetary and Financial Code that stipulates that the “General Council approves the presentation of the published financial statements” and that the General Council “may restrict the details of publicly disclosed information”.
17 ECB decision of 13 December 2010 on the issue of euro banknotes (recast) (ECB/2010/29).
18 ECB decision of 3 November 2016 on the allocation of monetary income of the national central banks of Member States whose currency is the euro (ECB/2016/36).
19 In 2023, this mechanism will concern Croatia.
20 SMP: securities markets programme; CBPP: covered bond purchase programme; ABSPP: asset backed securities purchase programme; PSPP: public sector purchase programme; PEPP: pandemic emergency purchase programme.
21 ECB decision of 15 December 2014 on the interim distribution of the income of the ECB (ECB/2014/57).
22 Application of the average key ECB interest rate from 23 November 2022 until the early repayment date or maturity date.
23 This key declined to 20.26% on 1 January 2023 with Croatia’s membership of the euro area.
24 The reserve base includes liabilities corresponding to “deposits”, “debt securities” and “money market paper” (denominated in euro and/or foreign currencies, with regard to residents or non-residents) as defined within the framework of the ECB provision on the collection of monetary and banking statistics. However it excludes interbank liabilities between institutions that are themselves subject to the minimum reserve system and liabilities vis-à-vis other participating national banks and the ECB.
25 The deposit facility rate was set during 2022 at -0.5% until 26 July, 0% from 27 July to 13 September, 0.75% from 14 September to 1 November, 1.50% from 2 November to 20 December and 2.00% from 21 December onwards.
26Securities markets programme – ECB decision No. 2010/5 of 14 May 2010.
27Covered bond purchase programme – ECB decisions No. 2011/17 of 3 November 2011 and No. 2020/8 of 3 February 2020 (recast).
28Public sector purchase programme – ECB decision No. 2020/9 of 3 February 2020.
29Corporate sector purchase programme – ECB decision No. 2016/16 of 1 June 2016 (recast).
30Pandemic emergency purchase programme – ECB decision No. 2020/17 of 24 March 2020 (recast).
31Asset-backed securities purchase programme – ECB decision No. 2014/45 of 19 November 2014 (recast).
32Covered bond purchase programme – ECB decision No. 2009/16 of 2 July 2009.
33 See the press release on the decision of the ECB Governing Council of 10 March 2022.
34 See the press release on the decision of the ECB Governing Council of 9 June 2022.
35 See the press release on the decision of the ECB Governing Council of 16 December 2021.
36 This resulted in an increase in the ECB’s paid-up capital from EUR 7,659 million in 2020 to EUR 8,270 million in 2021 and EUR 8,880 million in 2022. In particular, see (i) ECB decision (EU) 2020/138 of 22 January 2020 on the paying-up of the European Central Bank’s capital by the national central banks of Member States whose currency is the euro and repealing decision (EU) 2019/44 (ECB/2020/4), (ii) ECB decision (EU) 2020/136 of 22 January 2020 on the paying-up of the European Central Bank’s capital by the non-euro area national central banks and repealing decision (EU) 2019/48 (ECB/2020/2) and (iii) ECB decision (EU) 2020/139
of 22 January 2020 laying down the terms and conditions for transfers of the European Central Bank’s capital shares between the national central banks and for the adjustment of the paid-up capital and repealing decision (EU) 2019/45 (ECB/2020/5).
37 The ECB’s equity value includes all reserves, revaluation accounts and provisions equivalent to reserves less losses relating to prior years. In the event of a capital key adjustment arising during a reporting period, the capital also includes the net profit (or loss) at that date.
38 Interest is credited (or debited) to the Treasury’s account on the second business day of the following month.
39 EUR 872.3 million in 2022.
40 MF decision No. 16645.
41 As part of the renewal for 2021-23, the amount was revised down from EUR 31.4 billion to EUR 13.5 billion on 1 January 2021.
42 In accordance with Article R. 144-4, paragraph 3, of the French Monetary and Financial Code.
43 In particular additional seniority, travel allowances and death benefits.
44 Amending Article 4 of the regulation annexed to Decree 2007-262 of 27 February 2007 on the pension scheme for statutory employees of the Banque de France.
Appendix 4: scope of the Banque de France
The Institut d’émission des départements d’outre-mer (IEDOM – the Delegated Central Bank for the French Overseas Departments and Territories) was first set up in 1959. Its status was amended in 2016 by Act No. 2016-1691 of 9 December 2016 and since 1 January 2017 it has been a wholly-owned subsidiary of the Banque de France. Working on behalf of the Banque de France and under its authority, it discharges the Bank's tasks in the overseas departments and territories whose currency is the euro.
Europafi was created on 27 October 2015 to set up a public paper manufacturing unit within the Eurosystem. Three national central banks are shareholders alongside the Banque de France. The paper mill produces for its shareholders but also for other banknote printers in the euro area and the rest of the world.
Victoires Paiements was created on 22 May 2012 and is an economic interest grouping combining the Banque de France and the Caisse des Dépôts et Consignations (CDC). Its mission is to process retail payments (i.e. large volumes of small payments). The structure consists of a shared transaction processing platform, which allows the Banque de France and CDC to pool their investments and reduce costs. Flows between the two banks are also processed via the intrabank channel, outside the usual exchange systems
Created on 27 December 1995, BDF Gestion is the Banque de France’s asset management subsidiary. It manages a range of collective investment schemes as well as a number of individual mandates for institutional investors.
Appendix 5: recirculation of euro banknotes and coins by private operators in 2022
Under Article L. 141 5 of the Monetary and Financial Code, the Banque de France is tasked with maintaining the quality and fitness of the banknotes and coins in circulation within French national territory. Article R. 122 8 of the Code requires operators (credit institutions, cash‑in‑transit companies and retail sector operators) contributing to the processing and recirculation of banknotes that have not come from a Eurosystem central bank to sign an agreement with the Banque de France before undertaking such activities. At the end of 2022, 93 credit institutions had signed agreements with the Banque de France authorising them to recirculate banknotes to the public via customer operated machines; 146 operators had signed processing agreements setting out criteria for sorting banknotes; and 18 operators had signed an agreement authorising them to process coins.
Since 2019, bank ATMs replenished with banknotes recirculated by cash‑in‑transit firms have represented the most common logistical set‑up for distributing recirculated banknotes.
Overall, the external recirculation rate was 41.2% in the first half of 2022 (last known figures), a 3.7-percentage-point increase compared with the first half of 2021 and 2.2 points up on the end of 2021. The share recirculated by cash‑in‑transit firms rose to 55% from 53.7% in 2021, whereas the proportion recirculated by credit institutions inched down from 45.7% at end-June 2021 to 44% at end-June 2022.
1. Banque de France inspections of operators
All operators processing banknotes that have not come from a central bank and recirculating them via cash machines are subject to inspections by the Banque de France. In 2022, the Bank carried out 677 on‑site inspections of bank branches and workshops processing banknotes for customer‑operated machines (around 8% fewer than in 2021, in connection with the closure of 13 of the Bank’s cash-handling centres). In all, 445 of these inspections (65% of the total in 2022) were conducted entirely independently by staff from the network of cash-handling centres. Of the machines inspected, 4% were found to be non‑compliant (counterfeit detection test or fitness sorting test) and required intervention by the manufacturers’ maintenance teams. Across all the sites inspected (bank branches only), 45 temporary suspensions of banknote handling machines were issued. These led to 39 follow-up inspections that enabled recirculation to resume.
2. Banque de France inspections of coin‑processing sites
In 2022, the Banque de France performed 40 on‑site inspections of coin‑processing sites.
3. Banknote recirculation and coin processing in the overseas departments
The Banque de France has entrusted the Institut d’émission des départements d’outre‑mer (IEDOM – the Delegated bank for the French overseas departments and territories) with managing the recirculation activities of firms based in the overseas departments and territories. At the end of 2022, six agreements had been signed for the recirculation of banknotes via customer‑operated machines, as well as six for the processing of banknotes. The IEDOM conducted three inspections at the 202 bank branches affected (recirculation facilities, up by 156%). In addition, nine agreements on automatic coin processing were in effect, covering a total of 121 production sites. IEDOM carried out eight inspections in 2022.
4. Banknote authentication training for bank employees
In accordance with the provisions of Article R. 122 6 of the Monetary and Financial Code, the Banque de France continued to assist banks in training their staff on the manual distribution of banknotes in branches. As part of this task, in 2022, it provided banknote authentication training to 383 banking sector employees (373 by the Banque de France and ten by the IEDOM).
Appendix 6: summary of activity reports compiled by household debt commissions for 2022
In accordance with the provisions of Article R. 712-12 of the French Consumer Code, each Household Debt Commission draws up an annual activity report setting out the number of cases processed, the measures taken, the type of debt involved and the difficulties encountered. These reports are submitted to the Banque de France, which is responsible for summarising and disclosing them in its annual report.
1. The total number of applications submitted declined again, continuing the trend in place since 2015
In 2022, the Household Debt Commissions received 113,081 applications under the overindebtedness procedure. Overall, this represented a 6.5% decline relative to 2021. The year 2020 was atypical owing to the health crisis and is not included in the comparisons. With this in mind, the downward trend observed over the past seven years continued across the country. However, the speed of the the decrease slowed compared with the 2019-2021 period (–15.5%).
As at end-February 2023, the Banque de France had not noted any signs that might herald a significant increase in submissions. However, it continues to keep a close watch on economic developments and the financial difficulties affecting households.
The percentage of resubmissions was more or less stable, at 43.8% in 2022, compared with 43.2% in 2021. Declining resources and/or increased day-to-day expenses for some applicants, together with changes to personal situations, largely explain why the share of resubmissions did not go down.
Applications may be submitted at a Banque de France branch or reception and information desk, sent by post or completed online on the website. In 2022, the share of online applications rose steadily. Such submissions now account for 13.9% of the total across France, up from 10% in 2021.
2. Solutions consist primarily of imposed measures with no debt write-off or a partial write-off
The number of applications processed in 2022 (118,211) was down sharply compared with 2021 (130,094), which was directly related to the decline in submissions.
Finding permanent solutions remains the priority goal for the commissions, in order to limit resubmissions as much as possible. The share of cases resulting in permanent solutions (personal recovery procedures and debt rescheduling plans) fell slightly, declining by 1.6 percentage points in 2022, but still accounted for over 74% of cases handled. Debt rescheduling plans, with or without a partial write-off, rose slightly to 58.3%, compared with 56.8% in 2021.
The share of non-admissible applications also increased slightly, to 5.2%. The Independent Professional Activity (API) Act of 14 February 2022 is the reason for this increase, as some debtors continued to apply directly to Household Debt Commissions instead of filing their applications with a commercial or district court to be assessed for admissibility by a judge.
The share of applications directed towards a personal recovery plan fell slightly in 2022, decreasing by 1.5 percentage points compared with 2021; it made up 41.7% of cases directed towards a solution, once again underscoring the severity of the social and personal difficulties that applicants find themselves in.
3. Legislative developments aimed at promoting broader treatment of financial difficulties
Under the API Act, sole proprietors may now have their personal financial situation assessed by a Household Debt Commission, provided that their debt involves only personal assets (true for virtually all applications), or, more rarely, to supplement insolvency proceedings opened by a judge to deal with their professional situation. In each instance, the judge before whom the sole proprietor has brought their application is responsible for reviewing the application and, if it concerns the applicant's personal situation, for declaring the case admissible for the overindebtedness procedure and forwarding it to the geographically competent commission.
Under the law, professional debts may be taken into consideration when assessing the admissibility of overindebtedness applications. As a result of the changes to the legislation, company managers, who were already eligible for the overindebtedness procedure by virtue of their status, are also eligible for the procedure when they have professional debts.
4. A more accessible overindebtedness procedure
In late 2020, the Banque de France began offering the option of submitting overindebtedness applications online. This option was initially offered to individuals filing alone (with no joint applicants), who represent more than 75% of total cases.
Online filing is offered in addition to the existing submission methods for applications, which may be handed in at a Banque de France branch anywhere in the country or sent by post.
The new option offers the accessibility, flexibility, availability and simplicity provided by online solutions. Security is ensured by requiring applicants to use their FranceConnect identifiers. Applying online is a highly flexible solution: forms can be completed in stages 24/7 using a computer, tablet or smartphone. Individuals have up to six months to complete and validate their application and attach the required supporting documents.
The new solution saw steady use throughout 2022, with an increase towards the end of the year. Overall, online applications accounted for 17% of all eligible applications in 2022, i.e. by sole applicants (see above), an increase of 4.5 percentage points over the year.
5. Continued efforts to provide better social support
Overindebted individuals are often very vulnerable and need better support and guidance throughout all stages of the debt resolution procedure.
Currently, 500 certified Points conseil budget (PCB – Budget Management Advice Offices) form a nationwide support scheme, intended to identify individuals in financial difficulty at an early stage and, in some cases, avoid the need to file an overindebtedness application. The PCBs can provide advice on how to better manage the household budget, and inform individuals of their rights, as people are sometimes unaware of certain social assistance schemes.
In order to fulfil their mission as effectively as possible, the PCBs must meet a set of specifications that detail the expertise they need to acquire. As part of its tasks in relation to managing household overindebtedness and financial inclusion, the Banque de France participates in PCB steering committees and, via its network, provides information and directs potential users to these services.
The information and support provided both before the application is submitted and during processing also need to be improved, as the commissions noted that applicants sometimes have difficulty understanding the different steps of the procedure. With this goal in mind, in 2023 the Bank will offer applicants the opportunity to have two phone conversations:
- first, when the submission form is sent, so that the future applicant can get answers to questions about the procedure and make sure the application is complete before being filed;
- second, when the final measures are communicated, so that the implementation procedure can be explained, and especially obligations towards creditors. The aim is to avoid resubmissions (which may occur almost immediately due to a simple failure by the applicant to understand their role and responsibilities during this final stage of the procedure).
In 2022, the Banque de France set up financial inclusion councils (CDIFs) in all departments nationwide. Each council is chaired by the Banque de France's director in that department. Representatives of the banking, non-profit and institutional sectors all sit on the CDIFs.
The councils’ goals include making individuals and social actors more aware of the Bank's services and promoting cooperation to support people in financial difficulties.
A partnership was also set up last year with the France Services network. On 17 October 2022, the Governor of the Banque de France and the Minister for Public Sector Transformation and the Civil Service signed a cooperation agreement between the France Services network and the Banque de France, which will initially cover eight departments.
Employees at France Services offices in these locations will welcome users and provide initial information on the public services delivered by the Bank, including in relation to the overindebtedness procedure, the right to a bank account, access to payment incident databases and the Info Banque service. They may also steer people towards the Banque de France.
In addition, to help individuals access information and services, in 2022, the Banque de France opened a helpline, which may be reached on 3414 for the price of a standard local call (see chapter on Services provided to the economy and society).
The helpline covers all of the Bank’s financial inclusion public services and can field questions from users about the overindebtedness procedure and financial inclusion programmes, such as the right to an account, the special scheme for vulnerable customers and the cap on fees for bank-related incidents.
It supplements the Individuals/Financial Inclusion section of the Banque de France website, which offers full information on the overindebtedness procedure, banking fees, the special scheme for vulnerable customers, means of payment, micro-credit, social actors and more.
6. Stakeholders in the procedure are working hard to promote economic and financial literacy among the general public
As part of its role in promoting better public economic, budgetary and financial literacy, the Banque de France provides training sessions on overindebtedness and banking inclusion across the country.
Information and training campaigns on these topics were held all over France in 2022, both in person and via webinars.
The educational resources made available to Banque de France branches help to keep social actors better informed, assisting them in their task of supporting financially vulnerable people and aiding their efforts to combat overindebtedness.
In total, the commissions met more than 23,700 social actors and representatives of welfare groups, social action centres, family benefits offices, consumer and family associations and charities in 2022 (an increase of around 25%), to advise them on how to better guide individuals with their overindebtedness applications and throughout the procedure.
7. Regular communication with magistrates remains vital
In 2022, virtually all the commissions held at least one meeting with the district court judges or registrars in their region with a view to harmonising practices and finding appropriate solutions for the overindebted. These meetings, together with regular informal updates, also provided an opportunity to improve coordination of the different players. Some of the commissions organised specific briefing meetings on the API Act.
These discussions revealed that a number of courts were poorly informed about the law, resulting in difficulties, particularly in terms of sharing data with courts, the lack of specific documents for court referrals, and the coordination of participants more generally.
For 2022, under the API Act, around 20 applications were ruled by the courts to be admissible and forwarded by the court registrars to the Household Debt Commissions for processing.
The Banque de France, the Treasury and the Ministry of Justice held discussions and organised workshops in the fourth quarter of 2022, particularly with the aim of establishing a specific official paper form (Cerfa form) for businesses. Sole proprietors in financial difficulty (professional and/or personal) may submit their application to the court using this method, thereby facilitating the treatment of their situation.
As has been the case for many years, applications where property is involved regularly create difficulties for the Household Debt Commissions, and especially in the following two situations:
- the first pertains to the nature of the property itself and includes cases involving jointly owned assets, the division of property (usufruct, bare ownership, in connection with a separation, divorce or inheritance), or the valuation of shares held in sociétés civiles immobilières (SCI – real estate investment companies);
- the second arises when it is impossible to retain the asset and a sale is required: the nature of the assets, which may be of low value owing to their condition and/or location, can mean that a voluntary sale is not always possible. This often results in resubmissions.
In the case of debtors who are divorced or separated and who have debts in common (property, other loans), in many instances one of the parties is unaware of their joint liability for loans, especially if a divorce ruling has divided debts and expenses. In this case, some debts are not reported by the applicant, which can lead subsequently to resubmissions.
Some applicants ask for detailed explanations about the standard amounts and methods used to calculate their repayment capacity, which they deem to be inadequately tailored to their needs. Some are unwilling to be required to monitor their budget closely.
Social support, which is involved only when the application is submitted in many cases, remains a factor that can promote improved implementation of measures approved by the commission. In fact, not involving social support can result in difficulties in applying the measures, such as a lack of understanding of the plan, problems in setting up repayments (especially if debts have been sold by creditors to organisations or companies that specialise in purchasing debts), budget management problems, and so on. This too may lead to resubmissions. However, the limited number of available social workers makes it hard to deliver this support in some regions.
The commissions highlighted issues in dealing with cases where debt recovery has been outsourced to a specialised agency or bailiff (in particular, a failure by these parties to suspend proceedings while the overindebtedness application is being examined), or in cases in which debts have been sold, when it can be difficult to identify the exact owner of the claim.
The commission secretariats also reported other regularly encountered difficulties, including in situations where:
- Debtors are required to return a vehicle for which they have taken out a lease with a purchase option, but they need the vehicle to do their job. If the debtor's repayment capacity is positive and sufficient to pay the lease but not enough to settle all debts, the commission may, on reviewing the case, rule that the vehicle may be kept, and partially or totally write off the other debts. Conversely, when repayment capacity is positive but insufficient to pay the lease, the commission will propose to the debtor the option of a micro-loan to purchase a used vehicle so that they can keep their job.
- Debtors are unable to make creditors comply with the total or partial debt write-off measures approved by the commission or a judge. From time to time, this type of situation may also involve debts not reported as part of personal recovery procedures.
- Some debtors (especially elderly people) are finding it increasingly hard to provide supporting documents and/or to submit applications to receive benefits (such as personalised housing assistance benefits, for example), because most applications are now done exclusively online.
Implementing personal recovery procedures with judicial liquidation continues to be challenging and time-consuming, despite the recruitment of mandataires judiciaires (liquidators).
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