Macroprudential Policy

What are French banks and insurers doing to prepare for climate change? Where do they stand in terms of implementing France’s Energy Transition Law? Our analyses show significant though mixed progress with regard to transparency and governance of risks, and a growing but still incomplete recognition of climate risk as a financial risk.

Chart 1: Geographical breakdown of the exposures of French banks
Chart 1: Geographical breakdown of the exposures of French banks Source: ACPR. Note: as a percentage of total outstanding amounts for the 7 main French banks at 30 June 2018

Were it easy to predict financial crises, it would be just as easy for the macroprudential authorities to prevent them. The statistical methods used for forecasting financial crises are greatly improving but have to contend with the fact that such events are (fortunately) rare and occur suddenly. In this article, we discuss the usefulness of early warning systems as well as their limitations on the grounds that the financial system is constantly evolving.