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Please find some selected news from Banque de France’s office in Singapore:

Capital Markets Union: unleashing Europe’s potential – Paris, 25 November 2021, Speech by François Villeroy de Galhau, Governor of the Banque de France

Our Economic and Monetary Union as designed in Maastricht exactly 30 years ago can be seen as a three-hulled boat. Its strong, robust central body consists of key monetary assets: our single currency, trusted by a growing majority of 79% of European citizens, and our credible monetary policy as conducted by the Eurosystem. However, this monetary policy cannot be the only stabilisation tool, otherwise we run the risk of it being overloaded.  Our three-hulled boat needs to be complemented with two well-designed and well-functioning floats.

On one side, we need a public float including a more permanent common fiscal capacity (which doesn’t mean an additional yearly budget). It would help us to better cope with macroeconomic shocks. In this respect, the NGEU and SURE programmes have been major steps forward and are paving the way for such a capacity.

On the other side, a private float is necessary to foster a better capital allocation in the EU. The euro area has abundant savings: the surplus of domestic savings over investment amounted to EUR 340 billion in 2019. Yet the world’s largest pool of savings is not sufficiently channelled to productive investment. Over the last decade, the investment-to-GDP ratio has been declining, especially among non-financial corporations - before increasing again. And we have huge investment needs ahead of us if we are to achieve two decisive transformations: the ecological transformation and the digital transformation.

Capital Markets Union: unleashing Europe’s potential  


Banque de France has started a series of blog posts aiming at explaining the recently completed strategic review conducted by the Eurosystem.

  • The ECB mandate

The ECB mandate through the lens of the new monetary strategy

  • The Inflation Target

A clear and symmetric 2% inflation-target

  • The analysis behind the ECB’s strategic review

ECB's strategy Review


A working paper on Capital Controls and Foreign Reserves against External Shocks: Combined or Alone?

Long considered suboptimal, capital controls and FX interventions are now recognized as prudential measures. Yet, whether they should be used in combination remains an open question. Thanks to a rich dataset from 1950, we investigate how the response of FX reserves to an exogenous US monetary shock depends on capital controls.

The response is insignificant with a very close capital account. By contrast, for a significant number of countries, FX interventions and capital controls are combined to tame the effects of an international financial shock. Yet, as countries open up financially, FX interventions replace capital controls. There is no one-sizes-fits-all recipe.

Capital Controls and Foreign Reserves against External Shocks: Combined or Alone?


An article on Non-residents held fewer shares in French CAC 40 companies at end-2020

At end-2020, non-residents held EUR 667 billion worth of shares in French CAC 40 companies, out of a total market capitalisation of EUR 1,672 billion, which corresponds to a holding rate of 39.9%, down for the seventh consecutive year. Changes in stock prices accounted for most of this decline.

In 2020, non-residents purchased EUR 1.7 billion worth of CAC 40 shares, while residents were net buyers for a much higher amount, to the tune of EUR 10.5 billion.

Non-resident investors were mainly from the euro area (43.9%), whose share is increasing, and from the United States (32.4%).

Non-residents held fewer shares in French CAC 40 companies at end-2020  


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