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June 2018

By Françoise Drumetz and Rémy Lecat

Despite persistent high unemployment, recruitment difficulties have already started to arise in France. The current unemployment rate is approaching its structural level, but wages have been relatively sluggish. These pressures partly reflect temporary effects that are common during periods of intense job creation. In the medium term, more effective vocational training would help to lower the level of unemployment at which these pressures begin to emerge.

Chart 1: Downward unemployment rigidity in France?  Minimum, maximum and average unemployment rates for the 1985-2017 period
Chart 1: Downward unemployment rigidity in France? Minimum, maximum and average unemployment rates for the 1985-2017 period Source: Eurostat.

By B. Cabrillac, L. Jacolin, A. Noah

The intensification of competition in Sub-Saharan African (SSA) countries has had an ambivalent impact on credit risk. The resulting improvement in management and bank intermediation may, beyond a certain threshold, be offset by greater risk-taking. Strengthening prudential frameworks would make it possible to harness the opportunities offered by bank competition.

Chart 1: Does bank competition reduce or increase credit risk in SSA?
Chart 1: Does bank competition reduce or increase credit risk in SSA? Source: Brei et al., 2018. Relationship between the degree of bank competition (the Lerner index, between 0 and 1, measures banks’ market power) and credit risk (NPL, non-performing loans / gross loans)

By Christoph Grosse Steffen (with Marcel Fratzscher and Malte Rieth)

Countries that adopt a strict inflation target experience stronger growth and lower inflation after large natural disaster shocks. Inflation targeting can hence serve as an important shock absorber thanks mainly to a different policy mix. The results indicate that relaxing the inflation targeting regime might generate potential costs, since the stabilisation of future recessions might become more difficult.

Benefits of inflation targeting (=dark green) in the presence of large disasters
Figure 1. Benefits of inflation targeting (=dark green) in the presence of large disasters Note. Effects of a natural disaster that leads to reported insurance claims of 1% of GDP at quarter t=0. Inflation targeting countries=dark grey, non –inflation targeting countries= light green. Source: Fratzscher, Grosse Steffen and Rieth (2017)

By Emmanuelle Politronacci, Elodie Ninlias, Enda Palazzeschi, Ghjuvanni Torre

Within a monetary area, the quantity of banknotes circulating in a given Member State is unknown as banknotes move back and forth across borders and cannot be tracked. There are various estimates but these have the drawback of varying by up to a factor of three. But the issuance of the new series of euro banknotes, combined with surveys, enable these figures to be more specific. Only 10% of the banknotes issued in France are apparently used for transaction purposes in the country.

Widely differing estimates of the value of banknotes in circulation, all denomination included
Chart 1: Widely differing estimates of the value of banknotes in circulation, all denominations included (2015) Source: BdF, based on Eurosystem’s Currency Information System data

By Benjamin Bureau and Thibault Libert

In 2016-2017, corporate bankruptcies saw their sharpest drop since 2000. Public discussions often view the impact of corporate bankruptcies purely in terms of their negative short-term consequences, in particular on employment and creditors. However, we show that there may also be more positive medium to long-term effects stemming from resources being reallocated to more productive firms.

A confirmed decline in the number of corporate bankruptcies in France in 2017
Chart 1: A confirmed decline in the number of corporate bankruptcies in France in 2017 Note: Number of bankruptcies in the year, except for 2018, where the aggregate over the past 12 months at end-February 2018 is used. Source: Banque de France – FIBEN database.