Post n°193

Fed’s financial stability concerns and monetary policy

Published on 12/15/2020

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By Klodiana Istrefi, Florens Odendahl and Giulia Sestieri

Even though the Fed does not have an explicit financial stability objective extending beyond its supervisory responsibilities, the public speeches of Fed officials reveal that there is a relationship between the higher proportion of speaking time on financial stability topics and more accommodative monetary policy. Financial stability became a topic of concern in Fed speeches especially around the global financial crisis.

Chart 1. Main topics covered in Fed speeches
Chart 1. Main topics covered in Fed speeches Source: Istrefi, Odendahl, Sestieri (2020). The chart shows the proportion of six topics extracted from the Fed speeches for the period 1997 to 2018. The topic proportions displayed are annual averages.
Updated on 12/15/2020 18:46
Post n°192

Speed up restructuring proceedings in response to Covid-19?

Published on 12/10/2020

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By Chloé Zapha

Collective restructuring proceedings could be improved in order to deal effectively with ailing firms. Speeding up the process of corporate debt restructuring - starting with the safeguard procedure - could help as many firms as possible to recover.

Chart 1: fewer receivership proceedings have been initiated than in previous years since the beginning of lockdown
Chart 1: fewer receivership proceedings have been initiated than in previous years since the beginning of lockdown Source: France Stratégie (data from the BODACC, calculations by Cros, Epaulard and Zapha)
Updated on 12/10/2020 10:41
Post n°191

What if one solution was to empty your neighbours' waste bin?

Published on 12/08/2020

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Second prize-winning blog in the 2020 Eco Notepad Challenge - By Eugenie Ribault

The lack of waste management remains as harmful to the environment as civil aviation or merchant shipping. Financing these sectors, particularly in developing countries, remains complex: waste recovery is not profitable. How can these difficulties be overcome? What are the long-term benefits, locally and for the planet? This post explores some avenues including alcohol and tobacco taxes as a source of transitional funding.

Source: © Kelly Lacy, Bangladesh, 2015
Updated on 12/08/2020 10:02
Post n°190

To avoid shipwreck, imagine a "stranded-compensated" principle

Published on 12/03/2020

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1st prize-winning blog in the 2020 Eco Notepad Challenge - by Mathilde Salin et Louis Daumas

Less than a generation lies ahead of us to carry out the bulk of the changes needed to attenuate climate change. Such a rapid transition will imply the loss of a significant share of the physical, human and financial capital accumulated in carbon-intensive sectors. We need to acknowledge this loss and look at ways of making it tolerable.

An example: Propagation of stranded assets in the extractive sector
An example: Propagation of stranded assets in the extractive sector Sources: authors and Cahen-Fourot et al. 2019. Note: Stranded assets (forced capital under-employment) in the fossil extractive sector will directly or indirectly lead to asset stranding in sectors downstream.
Updated on 12/03/2020 10:13
Post n°189

What are the factors behind current high stock market valuations?

Published on 11/26/2020

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By Nicolas Chatelais and Arthur Stalla-Bourdillon

Despite the corrections at the end of 2018 and the Covid-19 shock, price-earnings ratios remain at high levels, particularly in the United States. However, based on indices adjusted for expected growth and the level of interest rates, this trend does not appear to be the result of irrational exuberance like in previous speculative episodes.

Chart 1: Cyclically adjusted P/Es and interest rates in the United States
Chart 1: Cyclically adjusted P/Es and interest rates in the United States Sources: S&P 500, Datastream, Fed Saint Louis & Philadelphia. Author’s calculations. Most recent value: October 2020
Updated on 11/26/2020 14:49
Post n°188

Who has purchased euro area debt since the start of the health crisis?

Published on 11/20/2020

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By Olivier Sirello

The coronavirus crisis and decline in economic activity have led to a steep rise in the need for financing. As a result, net issuance of public and private debt securities in the euro area has increased to unprecedented levels. The main buyers are central banks and banking institutions, and, to a lesser extent, non-euro area residents.

Chart 1: Public and private debt issuance has reached record levels in the euro area (Seasonally adjusted data, EUR billions)
Chart 1: Public and private debt issuance has reached record levels in the euro area (Seasonally adjusted data, EUR billions) Source: European Central Bank (author’ s calculations).
Updated on 11/20/2020 15:36
Post n°187

The technology balance of payments of France and the European Union

Published on 11/18/2020

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By Peter Gubert and Patrick Branthomme

The technology balance of payments (TBP) provides a framework for analysing international technology transfers. After displaying a surplus in 2018, France's TBP stood at equilibrium at the end of 2019. The European Union's TBP shows a surplus comparable to that of the United States.

Chart 1: France: TBP at equilibrium in 2019 after a slight surplus in 2018 (EUR billion)/balance excluding insurance and tourism).
Chart 1: France: TBP at equilibrium in 2019 after a slight surplus in 2018 (EUR billion/balance excluding insurance and tourism). Source: Banque de France
Updated on 11/18/2020 10:50
Post n°186

Large enterprises’ investment in times of crisis

Published on 10/20/2020

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By Anne Duquerroy and Clément Mazet-Sonilhac

Preserving companies' investment capacity as they emerge from the Covid-19 crisis is a key issue of economic policy, as shown by the emergency measures taken by the ECB and, in France, by the government. Indeed, access to external financing is a major determinant of investment. A financing shock, such as the 2008 crisis, could lead to a sharp decline in the investment rate of major French groups.

Cost of external financing for non-financial corporations (%)
Chart 1. Cost of external financing for non-financial corporations (%) Source: Gilchrist and Mojon (2017)
Updated on 10/20/2020 18:39
Post n°185

The Bank's VSE-SME correspondents during the health crisis

Published on 10/15/2020

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By Sylvie Bonneau

During the lockdown, the Banque de France's network of VSE-SME correspondents was greatly called upon to guide entrepreneurs in their requests for financing. Managers' concerns changed during this period.

Chart 1 – Managers’ meetings with VSE-SME correspondents and crisis-related needs
Chart 1 – Managers’ meetings with VSE-SME correspondents and crisis-related needs Source: Banque de France
Updated on 10/15/2020 18:08
Post n°184

Measuring international travel during the Covid-19 pandemic

Published on 10/07/2020

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By Florian Le Gallo and Kevin Schmitt

The Covid-19 pandemic has severely disrupted international tourism. As foreign traveller surveys are no longer conducted, the Banque de France has brought into play innovative information sources, such as payment card data, to assess the scale of the shock. After a massive drop in receipts since March, European visitors returned to France during the two summer months.

Chart 1: France’s international tourism receipts (in EUR billions) Source: Banque de France.
Updated on 10/07/2020 14:04
Post n°183

Towards a sustainable upturn in official development assistance?

Published on 10/02/2020

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By Luc Jacolin and Khalil Bechchani

Official development assistance (ODA) should be bolstered in 2020 by the international response to the Covid-19 crisis, whose impact in low-income countries is still uncertain. The main challenge is to ensure that the efforts undertaken will be sufficient and sustainable: increasing ODA is desirable if the sustainable development goals for 2030 are not to be compromised.

Chart 1: Changes in financial flows entering LICs (in USD billions)
Chart 1: Changes in financial flows entering LICs (in USD billions) Sources: World Bank, OECD and Banque de France estimates for 2020.
Updated on 10/02/2020 18:11
Post n°182

How to interpret the rebound in French GDP in 2021-2022?

Published on 09/30/2020

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By Pierre Aldama, Hadrien Camatte, Jean-François Ouvrard and Paul Sabalot

According to the Banque de France macroeconomic projections published on 14 September 2020, after declining by 8.7% in 2020, GDP growth is expected to stand at 7.4% in 2021 and 3.0% in 2022. Despite this apparently impressive rebound, the economic catching-up process should in reality only be very gradual. GDP should only return to its pre-crisis level at the beginning of 2022. This post provides a few explanations of these unusual growth rates.

Chart 1: France: Projections of the volume of GDP, compared to the post-2008 trajectory
Chart 1: France: Projections of the volume of GDP, compared to the post-2008 trajectory Sources: Insee, Banque de France
Updated on 09/30/2020 09:04

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