The French financial sector remains solid, according to Bercy and the Banque de France

"The risks weighing on financial stability are increasing," but "the Council noted the very good level of capital and liquidity of French banking and insurance companies, which is a strength in the current context," the Ministry of Economy and Finance indicated after the HCSF meeting, which took place in the morning.

The HCSF, the body that oversees the French financial system, whose stability and ability to contribute to financing the economy it aims to guarantee, has notably emphasized that "we are not seeing any restrictions on the supply of credit in France" and that there is even "significant room for maneuver for the production of housing credit," the same source specified during a telephone briefing with the press.

The HCSF has therefore not modified the rules governing the granting of real estate loans and has maintained the rate of the credit protection reserve (also called "countercyclical capital buffer") at 1%.

This rule requires banks to build up additional capital reserves beyond international requirements, intended to be mobilized to maintain the supply of credit in the event of a slowdown in economic activity.

The HCSF, however, decided not to extend another mechanism introduced in August 2023 for a period of two years: the "sector systemic risk cushion".

This mechanism consisted of requiring banks with significant exposure to highly indebted companies to set aside additional capital reserves, in addition to the capital already required by international banking regulations.

The HCSF has "decided to remove this measure," considering it now superfluous (because large, highly indebted companies are now a little less indebted, or because banks have slightly adjusted their exposure) but also "in a concern to simplify the architecture of the standards," explained a source from the Banque de France during the telephone briefing.

The High Council, however, specifies in its press release that it "will continue to monitor the risk of debt concentration and stands ready to reintroduce a macroprudential measure if this risk materializes again."