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Post n°322

Green Tech: Key Allies for Climate Goals

Published on 09/21/2023

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By Claire Alestra, Gilbert Cette, Valérie Chouard and Rémy Lecat

How can technology help achieve the Paris Agreement goals of net zero emissions and limiting global warming? The Alestra et al. (2022) Advanced Climate Change Long-term Model (ACCL) is used to assess different scenarios of technological innovations and carbon taxation. Only a multi-lever strategy could reach the climate objectives.

Graph 1: Increase in temperature by 2100 in a Low Carbon Tax scenario without technology mix
Graph 1: Increase in temperature by 2100 in a Low Carbon Tax scenario without technology mix
Updated on 09/22/2023 10:30
Post n°321

The fiscal roots of hyperinflation: a historical perspective

Published on 09/15/2023

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By Pamfili Antipa

According to Milton Friedman, economics Nobel prize winner, “inflation is always and everywhere a monetary phenomenon”. This blog examines the French assignat debacle and hyperinflation (1795-96) and suggests that unsustainable public finances and fiscal dominance were the primary causes of an excessive increase in the money supply and hyperinflation.

Chart 1: Children playing with marks, 1923
Chart 1: Children playing with marks, 1923
Updated on 09/15/2023 10:31
Post n°320

How does the Banque de France produce inflation forecasts?

Published on 07/25/2023

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By Youssef Ulgazi

According to the Banque de France's projection, French inflation measured by the Harmonised Index of Consumer Prices (HICP) will gradually return towards 2% in 2025. How is this projection produced? This post describes our main tools and shows how, by combining modelling and expert judgement, we produce disaggregated inflation forecasts that are consistent with the overall macroeconomic scenario.

Chart 1: HICP inflation projections in our June 2023 macroeconomic projections
Chart 1: HICP inflation projections in our June 2023 macroeconomic projections Source: HICP inflation (Harmonised Index of Consumer Prices), INSEE up to Q1 2023, Banque de France projections in the shaded area
Updated on 07/25/2023 09:03
Post n°319

How insurers are adjusting to rising inflation

Published on 07/18/2023

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By Aurore Cambou, Frédéric Ahado, Baptiste Moulin et Sarah Gandolphe

The impact of higher inflation varies across insurance categories. Insurers are facing an erosion in the value of non-inflation indexed assets and of their real returns, some of which is associated with an increase in liabilities . However, they have different levers at their disposal to adapt to this environment and meet their commitments towards policyholders.

Chart 1: Breakdown of French insurers' bond portfolios, as a % of the market value of assets
Chart 1: Breakdown of French insurers' bond portfolios, as a % of the market value of assets Source: ACPR - List of assets inS.06.02 template from Annual Solvency II Reporting at 31/12/2022
Updated on 07/19/2023 12:25
Post n°318

Markets normalising in 2023 following episodes of stress in 2022

Published on 06/22/2023

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By Luis Miguel Tavares

2022 was marked by significant market corrections against a backdrop of geopolitical tensions and monetary policy normalisation. While the financial system has absorbed these shocks well, localised episodes of stress have highlighted certain vulnerabilities. The Banque de France's market stress indicator tracks the origin and changes in market tensions.

Chart 1: Market stress at high levels throughout 2022
Chart 1: Market stress at high levels throughout 2022 Source: Bloomberg, SFTDS, Banque de France
Updated on 06/23/2023 12:06
Post n°317

The climate is changing, and European official statistics are adapting!

Published on 06/16/2023

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By David Nefzi and Léopold Gosset

The European Central Bank has published indicators aimed at analysing the impact of climate-related risks on the financial sector, using a harmonised and transparent methodology. While these indicators rank France favourably in comparison with its European neighbours, they still have their limitations and should be viewed with caution; further studies will seek to enhance their robustness.

Updated on 06/16/2023 10:07
Post n°316

Banknote issuance is up while the velocity of their circulation is slowing

Published on 06/08/2023

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By Lucas Devigne, Laure Lalouette and Raymond de Pastor

The number of banknotes in circulation and the motives for holding them have evolved over the past 20 years. The increase in banknote issuance coincides with a significant rise in both domestic hoarding of cash reserves and foreign demand. The escalation in motives for hoarding, but not for transactional purposes, has slowed the velocity of banknote circulation.

Chart 1: Changes in the four motives for holding banknotes as estimated shares of total net issuance in value terms since 2002 Source: Authors’ calculations based on Seitz, Devigne and de Pastor (2022).
Updated on 06/08/2023 08:31
Post n°315

Critical metals for the transition: macro-financial issues

Published on 05/09/2023

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By Stéphane Dees, Simon Dikau, Hugh Miller, Romain Svartzman

Several metals will play a critical role in the transition to a zero-carbon economy. Imbalances between supply and a growing demand for these metals could arise. In order to assess these imbalances, Miller et al (2023) estimate the demand for metals induced by the NGFS climate scenarios and outline the potential implications in terms of macro-financial vulnerabilities.

Chart 1: Change in demand for critical metals (in Mt) induced by the NGFS "Net Zero by 2050" scenario
Chart 1: Change in demand for critical metals (in Mt) induced by the NGFS "Net Zero by 2050" scenario Source: Miller et al. (2023)
Updated on 05/09/2023 08:26
Post n°314

Towards more clarity in central bank communication

Published on 04/13/2023

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By Sylvérie Herbert, Klodiana Istrefi and Giulia Sestieri

Central banks are shifting toward greater clarity in communicating their policy decisions, as reflected in simpler and engaging versions of monetary policy statements. We show that while the policy statements of the ECB, the Fed and the Bank of England are complex and cover several topics, their simplified versions focus on the main challenges for the general public (currently inflation).

Chart 1. Most frequent words in the simplified versions of monetary policy communication
Chart 1. Most frequent words in the simplified versions of monetary policy communication
Updated on 04/13/2023 10:20
Post n°313

Job-to-job flows and wage dynamics

Published on 04/06/2023

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By Clémence Berson and Elisa Busson

Job-to-job moves usually enable employees to improve their pay or working conditions. It is therefore an important factor in wage dynamics. Resignations, which often indicate a job change, can be used to forecast wage and inflation trends.

Chart 1: Changes in resignation and job-to-job rates in France
Chart 1: Changes in resignation and job-to-job rates in France Source: Dares, Insee, authors' calculations. Note: Resignations (establishments with more than 10 employees) = quarterly data; job changes = annual data (Berson et al. 2020); shaded periods = negative change in real GDP.
Updated on 04/06/2023 10:41
Post n°312

Strategic autonomy: issues for central banks

Published on 03/28/2023

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By Florian Le Gallo, Pauline Négrin and Pierre-François Weber

Policies aimed at fostering strategic autonomy have emerged in the European Union (EU) as a response to a geopolitical and economic environment that has been disrupted by major crises. Given their consequences for price stability, financial sovereignty and financing of the economy, these policies raise questions for the Eurosystem.

Diagram 1: Euro area strategic autonomy
Diagram 1: Euro area strategic autonomy
Updated on 03/28/2023 08:35
Post n°311

Are SRI-certified funds greener?

Published on 03/23/2023

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By Pierre Bui Quang and David Nefzi

Socially Responsible Investment (SRI) funds take account of social, environmental and governance considerations in their investment policy. Are they really greener than non-certified funds? Indeed, portfolio analysis suggests that on average they are. However, certification does not necessarily guarantee environmental excellence.

Chart 1: Carbon intensity of SRI-certified and non-certified funds (tCO2eq per M€ of revenue of the companies in which the funds invest).
Chart 1: Carbon intensity of SRI-certified and non-certified funds (tCO2eq per M€ of revenue of the companies in which the funds invest). Source: Banque de France, ISS Note: Equity portfolio of French equity funds.
Updated on 03/23/2023 08:50

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