What mission did the Banque de France take ?

Our determination to bring inflation down is bearing fruit

Proactive monetary policy has helped bring inflation down. Six increases in key rates between January and September 2023, totalling 200 basis points, helped to reduce inflation.

In France, consumer price inflation almost halved between February (peak of 7.3%) and December 2023 (4.1%), before falling even further to 3.4% in January 2024.

Similarly, in the euro area, consumer price inflation fell by almost two‑thirds between January (8.5%) and December 2023 (2.9%), and stood at 2.8% in January 2024.

In France, growth was resilient, albeit slower in 2023, at 0.9%. Household investment contracted by 5.1% in 2023 as financial conditions tightened. Higher financing costs and tighter credit standards weighed on business investment.

In France, monetary tightening has had an impact on both inflation and the expectations of economic agents. Household three‑year-ahead inflation expectations stood at 2.1% (December 2023). French business leaders’ three‑tofive‑year‑ahead inflation expectations stood at 2.5% (fourth quarter of 2023).

The transmission of monetary policy tightening to the financing conditions of the economy was effective and rapid. This helped to bring business and household demand back into balance with supply, gradually slowing price growth.

Payment means are rapidly adapting to the digital age. In addition to the consolidation of activities relating to means of payment within the Directorate General Cash and Retail Payments, 2023 saw the start of construction work on the new banknote manufacturing site at Vic‑le‑Comte and the launch of the preparation phase for the digital euro.

A resilient and adapting french financial system

Thanks to enhanced regulation since 2008 and stringent supervision (Single Supervisory Mechanism – SSM – and national supervisory authorities), the euro area’s banking and financial sector proved resilient in 2023. Nevertheless, there are lessons to be learned from bank failures in the United States and Switzerland.

The French financial sector has adapted. The six main French banking groups continued to report high solvency and liquidity ratios. Insurers have maintained a healthy balance sheet structure, but have had to adapt to the new environment of rising interest rates. Financial market vulnerability remained high. Despite a risky macroeconomic and financial environment, non‑financial agents have shown resilience (household debt declined, corporate credit risk under control). Macroprudential measures have helped to maintain a sustainable level of debt among economic agents.

In 2023, the Banque de France and the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority) assisted banks and insurers in their digital transition. To this end, they prepared for the implementation in 2024 of the European regulation governing crypto‑assets, published a report on the operational feasibility and practical benefits of a central bank digital currency (CBDC) for financial institutions, and launched the preparatory phase for the digital euro. The Banque de France and the ACPR also assisted these players in their climate transition. In particular, they assessed the compliance of the activities of banks considered less significant in terms of climate risk management, monitored insurers’ reports on how they take environmental, social and governance (ESG) criteria into account, and launched a new climate stress test exclusively for insurers.

The ACPR ensures compliance with good business practices and the protection of customers of financial institutions. Together with the Autorité des marchés financiers (AMF – Financial Markets Authority), the ACPR improved the usability of the website of the “Assurance Banque Épargne Info Service” (ABEIS) and blacklisted 1,262 unauthorised websites or players in 2023.

The Banque de France: Serving businesses and individuals

The Banque de France is expanding its services to businesses using a participative approach with a panel of managers, which will result in the creation of a “personal management space” in the first half of 2024. In addition, a climate indicator to support companies in managing climate risk will be deployed in 2024 for businesses in sectors facing major transition challenges (electricity, transport, etc.). In 2023, 11,192 project leaders and company managers were assisted by the Bank’s 102 department‑based VSE‑SME correspondents, and over 1,400 start‑ups were assisted in their efforts to obtain financing. In 2023, requests for credit mediation returned to a level comparable to that prior to the health crisis.

The Banque de France continued its work to promote financial inclusion through four complementary channels (face‑to‑face, internet, mail, one‑stop helpline 3414). In 2023, 31,008 bank accounts were opened at the Banque de France’s behest under the right to a bank account procedure, and the number of applications to the household debt commissions increased by 7.5% (121,617 compared with 113,081 in 2022).

As the steering body for France’s national financial literacy strategy (EDUCFI), the Bank provided training on financial, economic and budgetary issues to more than 130,000 people. In 2023, 221,800 students obtained the EDUCFI passport. Thanks to the extension of this passport to all year 9 classes, 750,000 students will obtain one each year. The Bank also ran budget workshops with its partners for 37,000 young people on the National Universal Service scheme. Lastly, it conducted three studies to assess the financial literacy of French people. The “ABC de l’économie”, “Mes questions d’argent” and “Mes questions d’entrepreneur” websites have been enhanced with podcasts, free educational content on social networks and digital games. There were over 92,000 visitors to Citéco.

The Banque de France provides financial services on behalf of the state, managing the French Treasury’s accounts and related payments. Since 2021, it has been responsible for issuing short‑term securities on behalf of the European Commission, to finance the European recovery plan NextGenerationEU.