New 12 months needs to the Paris monetary centre


I want to begin by extending, on behalf of the Banque de France and the ACPR, our warmest needs, to you, our companions in our day by day work: elected officers, monetary professionals, entrepreneurs, associations and members of the media. Could this yr be as comfortable as attainable for you and yours, and should your initiatives be fruitful, regardless of this Covid ordeal that has lasted too lengthy, and regardless of all of the uncertainties of 2022. 

My first want is clearly that we lastly overcome this pandemic, and that we escape from the strain of this emergency and return to the elemental decisions for Europe and our nation, in the long run. The twentieth anniversary of the euro, which we’re at present celebrating, invitations us to take action.

The euro is doubtless essentially the most concrete success of European integration; it’s “Europe within the citizen’s pocket”, on the service of the 340 million Europeans who use it throughout 19 international locations. Furthermore, the euro enjoys unprecedented in style assist: 74% of French residents and 78% of Europeans at the moment are in favour. 

The prerequisite for this confidence is value stability, which is the accountability of the Eurosystem (the ECB and the 19 nationwide central banks); now we have efficiently achieved this main mission. In France, the inflation price has greater than halved: 1.4% per yr on common between 2002 and 2021, in comparison with 3.4% between 1982 and 2001. This isn’t only a statistic, it’s a very concrete actuality, measurable by a couple of examples.

The worth of a kilo of bread was EUR 2.7 in December 2001 and EUR 3.6 in November 2021, i.e. an annual enhance of 1.4%. The worth of pasta has elevated at a a lot slower price, with a median enhance of 0.1% per yr. The euro has due to this fact helped to guard the buying energy of French residents, which has elevated by 25% over the past twenty years. The short-term “inflation hump” that now we have been seeing for the previous few months, related to an unprecedented financial rebound, doesn’t change this commentary, and I’ll return to this later.

A forward-looking euro means new banknotes after 2024, with a brand new design, and much more safe – there at the moment are solely 17 counterfeits per million banknotes, making the euro probably the most safe currencies on the earth. It’s also a digital euro. The investigation part for a “digital retail euro” was launched on 1 October final yr, for a interval of two years. The intention can be to offer a sort of “digital banknote”, which might mix the safety of banknotes issued by the central financial institution with the convenience of use and innovation of dematerialised technique of fee. The ECB and the Banque de France are engaged on all of the related challenges, and now we have already carried out 9 experiments in Paris on an “interbank” digital forex. They are going to be continued in 2022, specializing in bettering cross-border funds.

Certainly, the euro can be a worldwide success: no continent earlier than us had managed to create and introduce a brand new forex on this method. On this respect, the euro has a political dimension, to consolidate European sovereignty – just like the greenback for the US. Our forex has confirmed its function in defending European economies from the turbulence of Covid, and has preserved beneficial financing situations for all financial gamers, households, SMEs and corporations, and states.

However for the trimaran of the euro to be absolutely operational, its central hull – the ECB and the one financial coverage – must be accomplished with two floats. A public float with a everlasting widespread fiscal capability (which doesn’t imply that an extra annual funds is required), to higher address macroeconomic shocks. And a personal float to advertise a greater allocation of capital within the euro space. The latter has plentiful financial savings: the excess of home financial savings over funding structurally exceeds EUR 300 billion. It’s important to channel them extra in direction of financing the 2 main transformations of the approaching decade: the ecological and digital transformations.

As regards the financial scenario, listening to greater than 8,000 firms, we are going to publish our subsequent month-to-month survey on Tuesday 11 January, and can present a primary evaluation of the consequences of the fifth wave. We stay assured that they are going to be comparatively restricted: now we have discovered over the previous two years that each Covid wave, nonetheless severe, has diminishing financial results. In our December projection, we confirmed that even an opposed situation of additional extreme well being restrictions – which isn’t the case at the moment – wouldn’t forestall the French economic system from returning by subsequent yr to the GDP trajectory it will have adopted within the absence of the Covid disaster. These attainable restrictions would admittedly cut back common development in 2022, however this needs to be absolutely offset by further development in 2023.

The opposite short-term subject is in fact that of inflation: it’s now near its peak in our nation (December exhibiting first indicators of stabilisation) and within the euro space. Whereas remaining very vigilant, we imagine that provide difficulties and power pressures ought to steadily subside over the course of the yr. We should always then return to not the low inflation of the previous, however to a brand new inflation regime near our 2% goal, with financial coverage normalising in phases accordingly.

I want to end with the structural initiatives, on which I hope we will make progress this yr: the environment friendly firefighters of the disaster should steadily hand over to the architects. That is what I want to see for France, centred round our two main medium-term financial challenges: inadequate potential development, related to the shortage of expertise and workforce obtainable to companies; and extreme public debt and present bills. We should additionally strengthen our structure in Europe: this yr we should finalise laws for conventional gamers (banks with Basel III, insurance coverage with Solvency II), but additionally regulate new actions: cryptoassets and decentralised finance. The Banque de France and the ACPR will actively contribute to this inside the framework of the French Presidency of the European Union. This French Presidency may have served the euro nicely in its twentieth yr if it additionally makes progress on two as but unfinished imperatives, the Banking Union and the Capital Markets Union.  They’re certainly a prerequisite for higher channelling European financial savings in direction of the ecological and digital transformations, as I discussed earlier. 

Certainly, comfortable New 12 months 2022 to Europe, to our expensive nation and particularly to every of you!


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