France’s insurance sector is growing again while banks have seen a “return to normal” after the COVID-19 crisis, the governor of the Bank of France, François Villeroy de Galhau, said on Tuesday (31 May).
Villeroy de Galhau, who was invited to present the activity report of the French Prudential Control and Resolution Authority (Autorité de contrôle prudentiel et de résolution, ACPR), said that “the feared wave of bankruptcies […] did not occur” after the exceptional support granted to cope with COVID-19 was withdrawn.
“France has the strongest banking and insurance sector in the eurozone: this is an asset for our economy,” he added.
The ACPR — which supervises French banks and insurance companies and is attached to the Bank of France — is responsible for ensuring the stability of the financial system.
The governor sought to provide reassurance in the face of the economic shock caused by the crisis in Ukraine, confirming that financial stability had not been affected so far.
The exposure of French companies to Russian assets remains limited and “the withdrawal of investments from the country has been delicate but well organised”.
This is a thinly veiled reference to the continued presence of large French companies in Russia, notably TotalEnergies, which has been strongly criticised.
Yannick Jadot, a Green MEP and former candidate for the French presidential elections, has even accused TotalEnergies of being “complicit in war crimes”. The company announced at the end of April that it would “start to withdraw”.
Nevertheless, the Russian invasion has dashed hopes of strong growth after the pandemic and revived the “inflationary pressures” already felt throughout the second half of 2021.
Villeroy de Galhau emphasised the “need for a gradual but resolute monetary normalisation”, in line with the latest announcements made by the European Central Bank.
The ECB has announced the end of its bond purchase policy within the framework of the Pandemic emergency purchase programme and is now suggesting that rate increases are no longer taboo.
This view does not command unanimous support, however. Eric Toussaint, economist and spokesperson for the international network of the Committee for the Abolition of Illegitimate Debt (CADTM), told EURACTIV that an increase in rates will put a heavy burden on public debt repayment costs.
“Growth is down and the debt burden will increase. We can expect to see a resurgence of austerity in the next five years,” he said.
Villeroy de Galhau and Alain Ménéménis, chairman of the ACPR’s Sanctions Committee, also welcomed the Financial Action Task Force (FATF) report published on 18 May which highlighted the French authorities’ “robust and sophisticated” approach to anti-money laundering and counter-terrorist financing.
The report, however, highlighted considerable shortcomings in France’s supervision of overseas departments and territories.
This is particularly true in French Guiana, the heart of drug trafficking to mainland France and a territory for which no comprehensive supervision strategy exists, the FATF says.
Questioned by EURACTIV, Dominique Laboureix, secretary-general of the ACPR, stressed that there was no doubt about the “full application of French law” in these territories. He also pointed out that an agent of the ACPR was acting as a local intermediary with the Institut d’émission des départements d’outre-mer.