2023-12-20 17:46:47
By Le Figaro with AFP
Published 5 hours ago, Updated 4 hours ago
Agnès Benassy-Quéré, second deputy governor of the Banque de France. JULIEN DE ROSA / AFP
The French financial system is proving resilient in the face of a spectacular rise in interest rates, estimates the Banque de France, while the most indebted non-financial companies might become vulnerable. “The general message of the report is a certain resilience of the French, European and global financial system» in the face of rising interest rates, explained Agnès Benassy-Quéré, second deputy governor of the Banque de France, during a press conference.
«The accelerated tightening of monetary policy has not led to major financial instability at this stage», Underlines the institution in its report on the risks of the financial system. “The high risk of geopolitical or macroeconomic shocks, however, requires great vigilance», continues the Banque de France, referring to non-bank financial companies (such as funds), but especially non-financial players. They are faced with “delayed effects» of this increase in rates, notes Agnès Benassy-Quéré.
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“The debt burden is gradually increasing”
If certain funds were to falter – in the event of a macroeconomic or geopolitical shock for example – this might have collateral effects.for the entire financial system“. As for non-financial companies, “the debt burden gradually increases» with the rise in rates, recalls the Banque de France, even if the sector “in its entirety» conserve «a good financial situation».
«At the aggregate level, the rise in rates is absorbable» et «is not an impassable wall» but questions exist regarding “heterogeneity» and therefore the exhibition of individual companies, according to Agnès Benassy-Quéré. The most indebted companies are particularly vulnerable – and “these vulnerabilities might increase in the event of a macroeconomic slowdown or further tightening of financing conditions», underlines the report.
Furthermore, the risks linked to the decline in the real estate market “remain contained at this stage“, both concerning the residential real estate market and commercial real estate, for which the contraction of the market is “more marked“. Be careful, however, warns the institution, “for certain real estate investment funds“. In the longer term, “the financial system must accelerate its adaptation to cyber and climate risks», warns the Bank of France. If financial institutions are moderately exposed to the inherent risk of the transition to a decarbonized economy, “their portfolios remain insufficiently aligned with decarbonization objectives”, according to the report.
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