European Union

Post n°300

The stages in France’s European financial integration

Published on 01/12/2023

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By Iris Chagnaud, Jean-Baptiste Gossé, Florian le Gallo and Rémy Lecat

France’s European financial integration, measured by its capital flows to its main partners, accelerated strongly with the introduction of the euro and European measures designed to unify financial services. It fell back significantly with the global financial crisis and then the euro area debt crisis. Its recovery in 2018-19 has since been tested by the Covid-19 and energy crises.

Chart 1. France’s net capital flows abroad (1980-2021, % of GDP)
Chart 1. France’s net capital flows abroad (1980-2021, % of GDP) Source: BDF and BIS, authors’ calculations.
Updated on 01/12/2023 10:05
Post n°297

The euro area welcomes its 20th member, Croatia, on 1 January 2023

Published on 12/19/2022

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By Violaine Faubert and Florian Le Gallo

Ten years after joining the European Union, Croatia will adopt the euro on 1 January 2023, thus becoming the 20th member of the euro area after Lithuania. The adoption of the euro, which is achieved by complying with the convergence criteria, will reduce the exchange rate risk. Lower transaction and financing costs will strengthen trade and financial integration, thereby promoting real convergence.

Chart 1: Croatia's exports and imports with its main trading partners in 2021
Chart 1: Croatia's exports and imports with its main trading partners in 2021 Source: Eurostat, balance of payments. Note: trade flows broken down by partner country and product. Croatian exports of goods to Germany account for 11% of its total exports of goods.
Updated on 12/19/2022 09:13
Post n°286

The challenge of strengthening European financing for start-ups

Published on 10/14/2022

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By Boris Julien-Vauzelle, Camille Jehle, Jean-Baptiste Gossé

In 2021 and the first half of 2022, European start-ups raised record amounts and 68 of them gained the status of “unicorn”. Up to now, this dynamic has relied on the increasing involvement of US and Asian investors, particularly for late-stage funding rounds. This emphasises the need for the European Union (EU) to strengthen its own venture capital industry.

Chart 1: Investor origin by amounts raised by EU27 start-ups (2016-21)
Chart 1: Investor origin by amounts raised by EU27 start-ups (2016-21) Source: Banque de France calculations, based on Crunchbase data (at 31 July 2022). Note: The investors considered here are lead investors whose identity is known (see definition below).
Updated on 10/14/2022 15:54
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°264

European Union debt, a new benchmark asset?

Published on 03/28/2022

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By Léa Le Quéau, Agathe Madeline and Paul Sabalot

The European Union is going to issue close to EUR 800 billion of debt to finance the NextGenerationEU recovery plan, making it one of the largest public debt issuers in the euro area. European debt has some key advantages that would make it ideal as a benchmark asset. However, it still needs to reach the critical mass required to ensure a sufficiently liquid secondary market.

Chart 1: NGEU debt yields are comparable to those of the highest rated euro area issuers Source: Authors’ calculations using Bloomberg data and median of Moody’s, S&P and Fitch ratings (data as at 18/03/2022).
Updated on 03/29/2022 10:38
Post n°236

Lessons from the Marshall Plan for the European Recovery Plan

Published on 10/29/2021

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By Jean-Baptiste Gossé, Aymeric Schneider and Roger Vicquéry

The EU post-Covid recovery plan is the largest European-wide fiscal stimulus in 70 years. This post revisits the experience of the Marshall Plan by highlighting the role of structural effects, conditionality design, the need to prepare the plan exit, the influence of fundamentals and the importance of the plan’s success as a vector of European integration.

Chart 1: Marshall Plan and European plan by type of aid and size of investments financed (% of GDP of recipient countries)
Chart 1: Marshall Plan and European plan by type of aid and size of investments financed (% of GDP of recipient countries)
Updated on 10/29/2021 21:20
Post n°203

Carbon tax: a comparison of the impact in France and the rest of Europe

Published on 02/10/2021

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By Antoine Devulder and Noëmie Lisack

How would the impact of a European carbon tax on the French economy differ from that in the rest of the EU? The medium-run impact on value added would be 20% lower in France than in the rest of the EU. This divergence would stem more from differences in the sectoral structure of the economy (the weight of those sectors most affected, inter-sectoral flows) than from differences in carbon intensity between homologous sectors.

Chart 1: Breakdown by sector of the impact on real value added in France and in the rest of the EU
Chart 1: Breakdown by sector of the impact on real value added in France and in the rest of the EU Source: Authors' calculations.
Updated on 02/10/2021 09:12
Post n°181

State aid and Covid-19: a European dilemma

Published on 09/25/2020

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By Emilie Hermet and Dorothée de Franclieu

In response to the economic impact of the Covid-19 crisis, the European Commission has authorised a temporary easing of the framework governing the use of State aid. While this measure was necessary in an emergency situation, it is likely to distort competition in the internal market if it is used on a wide, prolonged and heterogeneous basis.

Chart 1: Breakdown by country of State aid ceilings authorised by the Commission from 19 March to 8 July 2020
Chart 1: Breakdown by country of State aid ceilings authorised by the Commission from 19 March to 8 July 2020 Sources: European Commission data (estimated ceiling amounts) and author's calculations. The amount of State aid paid out can be de facto much lower than the ceiling amount, in particular in the case of loan guarantees (e.g. Germany).
Updated on 09/25/2020 17:37
Post n°116

What are the financial risks to euro area growth?

Published on 05/27/2019

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By Naomi Cohen, Laurent Ferrara, Matteo Mogliani and Jean-Guillaume Sahuc

Monetary policy decisions require a prior assessment of different economic scenarios, including the most extreme ones. Assessed on the basis of the Banque de France's Financial Conditions Index, financial risks that are likely to weigh on the distribution of future euro-area GDP growth appear limited.

Expected distribution of euro area quarterly GDP growth between 2001 and 2018
Chart 1: Expected distribution of euro area quarterly GDP growth between 2001 and 2018 Sources: Eurostat, Banque de France, authors' calculations.
Updated on 02/17/2020 11:37
Post n°114

The euro: is the grass always greener on the other side?

Published on 05/06/2019

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By Laurent Abraham and Jean-Baptiste Gossé (Banque de France)

On its 20th anniversary, the euro is enjoying remarkably high levels of support. However, a paradox exists in public opinion: each country appears to believe that the single currency is more beneficial for the other countries. Improving the functioning of national and European institutions could mitigate this paradox and strengthen attachment to the euro.

The benefits of the euro are more widely recognised at the European level than at the national level.
Chart 1: The benefits of the euro are more widely recognised at the European level than at the national level. Source: Flash Eurobarometer. Note: Average gap between the perceived benefits of the euro for the EU and for the individual countries, 2011-2018, excluding Latvia and Lithuania due to the period under review. The darker the green, the larger the gap.
Updated on 02/17/2020 11:06

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