Bank lending to business has risen more sharply in France than anywhere else in Europe: up 4.5% in annual terms at end-November 2015, compared with a rise of 1% in Germany, and 0% in Italy. Moreover, interest rates in France are among the lowest in Europe. Interest rates on new bank lending are currently below 2% on average, compared to 5% in 2007. However, I would like to stress the fact that access to cash loans is more difficult for very small enterprises. Their fragile financial position may be one reason; but there is an ongoing misunderstanding with the banks that the latter must seriously address. French households’ savings must also adjust to the low interest rate environment. This is an opportunity to encourage more “risky” and more long-term investments, both in the interest of investors themselves and of our economy. Today only 31% of French households’ financial investments are made up of risky assets, against 45% in the euro area. This requires taking action in two directions. First, the decrease in interest rates should be gradually passed on to risk-free investment returns – this is why I proposed lowering the rate on the PEL, the French housing savings plan, this is also why we must resolutely continue to lower the returns on life insurance invested in euro funds. Second, new products should be developed: probably less liquid, with or without a capital protection over the long term, and possibly offering the best equity performance over time.
François Villeroy de Galhau: Challenges for France’s economy and financial sector in 2016 New Year Address by Mr François Villeroy de Galhau, Governor of the Bank of France, Paris, 18 January 2016. *  *  *  Ladies and gentlemen, Thank you for coming here today to this magnificently restored Golden Gallery. This is the first time that I am giving this address as Governor of the Banque de France, but it is an auspicious tradition that brings us together. I would like to start by extending my warmest wishes to you, your colleagues and your institutions. 2016 has already been marked by volatility: weak financial markets and commodity prices, from China and the Middle East; political uncertainty in Europe, in Southern Europe, in Eastern Europe, North-Western Europe with the British referendum, and even in Central Europe with the refugee crisis. It is our duty to be vigilant, but we must also, on the one hand, distinguish real information from background noise and real challenges – and there are no shortages of them – from the sensational and sometimes excessive statements at this start of this year; on the other hand, in the face of current volatility, we must stick to our mediumterm objectives. This evening I will not discuss the Eurosystem’s monetary policy as we are in the “silent period” leading up to the Governing Council meeting this Thursday. Such longterm strategies also apply to the reforms in Europe and in France.