Post n°284

Payment times still long in French overseas territories despite the health crisis

Published on 09/26/2022

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By Bruno Terrien

Late payments are a structural weakness of companies in the French overseas territories. By accelerating the recovery of trade receivables, the health crisis has led to a significant reduction in the cash flow needs associated with payment times. However, companies facing the longest payment times did not benefit from this improvement.

Chart 1: Differences in payment times between the French overseas territories and France
Chart 1: Differences in payment times between the French overseas territories and France Source: IEDOM – FIBEN database
Updated on 09/26/2022 08:42
Post n°283

The resilience of French SMEs two years into the Covid crisis

Published on 09/19/2022

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By Nicoletta Berardi, Benjamin Bureau and Frédéric Delamarre

This post assesses the financial position of French SMEs at the end of March 2022, i.e. two years after the start of the Covid-19 crisis, and at the very beginning of the war in Ukraine. It finds that the vast majority of SMEs have weathered the health crisis well, particularly by keeping their net bank debt under control.

Chart 1: Distribution of SMEs according to their level of net bank debt (as % of number of companies)
Chart 1: Distribution of SMEs according to their level of net bank debt (as % of number of companies) Source: Banque de France, Anacredit and ad hoc bank deposit database
Updated on 09/19/2022 08:43
Post n°282

GDP-linked bonds: the bewitching song of the sirens

Published on 09/01/2022

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Par Sarah Mouabbi, Jean-Paul Renne and Jean-Guillaume Sahuc

Debt-to-GDP ratios in advanced economies increased considerably during the Great Recession and the recent pandemic, and may prove to be a source of vulnerability. Commentators propose indexing the debt service to GDP growth to provide the government with an automatic stabilizer for its financing. FNew fndings suggest that GDP-linked bonds are more expensive for the government and can only prevent high tail risks in debt-to-GDP ratios in the short run.

Chart 1 : Realized vs. expected real payoffs of one-year bonds with unit face value
Chart 1 : Realized vs. expected real payoffs of one-year bonds with unit face value Source: Mouabbi, Renne and Sahuc (2021).
Updated on 09/01/2022 08:38
Post n°281

A global shock to bond yields?

Published on 08/03/2022

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By Mattia Girotti, Guillaume Horny, Adrian Penalver and Anna Petronevich  

The co-movement of sovereign bond yields has been unusually strong in the most recent period. A global factor usually explains much of the variation in 10-year yields. What has been particularly striking over the recent months is the importance of a global factor in explaining 2-year yields. This suggests a common shock is driving expectations of monetary policy in the major advanced economies.

Chart 1 Global-local decomposition of French 2-year and 10-year sovereign yields
Chart 1 Global-local decomposition of French 2-year and 10-year sovereign yields Source: Bloomberg, authors’ calculations. Note: Solid lines represent the yields. Areas show the contribution of each factor relative to the 2015-2022 average rate. Latest observation: 06/07/2022.
Updated on 08/03/2022 09:02
Post n°280

The Hegemony of the Dollar from a Two-Century Perspective

Published on 07/21/2022

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By Roger Vicquéry

Recent geopolitical tensions have put the hegemonic role of the dollar, and its potential demise, back into the spotlight. Looking at a new long run measure of global currency competition over two centuries, no global currency leader has been able to sustain such a large lead over its competitors for such a prolonged period.

Chart 1: The Rise and Fall of Global Currencies over Two Centuries
Chart 1: The Rise and Fall of Global Currencies over Two Centuries Source: Vicquéry (2022). Global currency dominance GDP-weighted scores.
Updated on 07/22/2022 09:14
Post n°279

China at the heart of Asian value chains

Published on 07/18/2022

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By Camille Macaire and Marie-Élisabeth de la Serve

The Covid crisis has strengthened China’s central role in global value chains. However, the rise in its position in these chains dates back to before the pandemic. It has become particularly closely integrated with ASEAN members, which import a growing share of intermediate goods from China.

Chart 1: China is building new dependencies on its products, especially in ASEAN countries
Chart 1: China is building new dependencies on its products, especially in ASEAN countries Source: OECD Trade in Value Added (TiVA) database. Note: Share of Chinese value added in final demand, manufacturing industry.
Updated on 07/20/2022 08:40
Post n°278

Green bonds: is their growth sustainable?

Published on 07/12/2022

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By Tamaki Descombes, Antoine Kergadallan and Quoc-Trieu Le

Issuance of green bonds has been growing at a fast pace in the past 10 years, mainly under the impetus of the European Union and its Member States, which are the world's largest issuers. We take a closer look at this market and explore the challenges it poses, together with the prospects going forward: interactions with monetary policy, investor appetite, greenwashing risk, etc.

Chart 1: Green bonds issued in accordance with the International Capital Market Association’s principles
Chart 1: Green bonds issued in accordance with the International Capital Market Association’s principles Source: BloombergNEF, authors’ calculations
Updated on 07/13/2022 08:37
Post n°277

Does robot density influence the effects of monetary policy?

Published on 07/05/2022

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By Stéphane Lhuissier

In a context where industrial jobs may be replaced by robots, this post shows that monetary policy is transmitted differently depending on industrial sectors’ degree of robotisation. Jobs in heavily robotised industries are half as sensitive to an interest rate change as those in low-robotisation industries.

Chart 1: Monetary policy transmission is weakened in heavily robotised industries
Chart 1: Monetary policy transmission is weakened in heavily robotised industries Source: Author’s calculations.
Updated on 07/15/2022 12:03
Post n°276

Taking stock, two years after the launch of the PEPP

Published on 06/30/2022

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By Hadrien Camatte, Théophile Legrand and Aster Recoules

Net asset purchases by the Eurosystem under the Pandemic Emergency Purchase Programme (PEPP) were discontinued at the end of March 2022, two years after its launch. This programme successfully prevented the fragmentation of the euro area sovereign debt market in response to the Covid-19 pandemic and will continue to preserve the transmission of monetary policy through flexible reinvestment.

Chart 1: Reduction in fragmentation risk in the euro area since April 2020
Chart 1: Reduction in fragmentation risk in the euro area since April 2020 Source: Bloomberg, authors’ calculations. Note: Fragmentation is measured by the spread of the euro area GDP-weighted yield over the equivalent overnight indexed swap (OIS) rate.
Updated on 07/01/2022 09:43
Post n°275

What are business leaders’ inflation expectations?

Published on 06/23/2022

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By Paul Bouche, Julien Demuynck, Erwan Gautier, Frédérique Savignac

For the first time, the Banque de France is publishing the results of a survey on business leaders’ inflation expectations, collected since the end of 2021. One-year inflation expectations have increased since the beginning of the year and their median stands at 5% in the second quarter of 2022. Longer-term expectations (3-5 years) are also rising, but more slowly, with a median of 3%. This survey was conducted prior to the ECB's monetary policy normalisation announced on 9 June, which is expected to contribute to the gradual "re-anchoring" of inflation expectations.

Chart 1: Changes in inflation expectations since end-2021 in France (median in %)
Chart 1: Changes in inflation expectations since end-2021 in France (median in %) Note: median weighted by the number of employees in the company and the value added in the company's sector, 1% of the highest responses are not taken into account in the calculations. Source: IE-Banque de France survey.
Updated on 06/23/2022 16:33
Post n°274

The challenges of climate modelling for central banks

Published on 06/17/2022

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By Stéphane Dees, Jean-François Ouvrard and Pierre-François Weber

Modelling is a key element in the Eurosystem's climate change action plan. Macroeconomic analysis and the preparation of monetary policy decisions are based on quantitative work in which models play a central role.

Chart 1: Economic impacts of climate change
Chart 1: Economic impacts of climate change Source : Authors’ analysis
Updated on 06/17/2022 08:52
Post n°273

Better Land-Use and Insurance to Mitigate Natural Disasters

Published on 06/10/2022

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By Céline Grislain-Letrémy  and Bertrand Villeneuve (Université Paris-Dauphine)

The rising costs of natural disasters over the last decades are largely explained by urbanisation in exposed areas. Land-use and insurance policies can limit this urbanisation. Simple frequently-observed policies, with prohibited red zones and zones without insurance tariff differentiation, are relatively efficient. It is critical that red zones be redefined to reflect changes in climate risks or population developments.

Chart 1: New Orleans
Chart 1: New Orleans Source: pixabay.com
Updated on 06/14/2022 10:33

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