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Banque De France's Annual Report 2012

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Banque De France's Annual Report 2012 2012 ANNUAL REPORT BANQUE DE FRANCE To The President of the Republic And Parliament By Governor Christian Noyer Contents To mark the issue of the new five euro banknote, the illustrations in this Annual Report represent over two centuries of banknotes printed by the Banque de France starting with the number five (see table of banknote illustrations on page 152). The photos of the General Council and the members of the Executive Committee were taken by Marthe Lemelle. 2 Banque de France Annual Report 2012 Contents Monetary policy, financial stability and support for the economy 6 1| INTERNATIONAL ENVIRONMENT 7 1|1 Capital and commodity markets 7 1|2 Economic activity outside the euro area 10 2| ECONOMIC AND MONETARY SITUATION IN THE EURO AREA AND FRANCE 14 2|1 Weakened growth 14 2|2 Monetary and financial developments in 2012 18 3| THE EUROSYSTEM’S MONETARY POLICY RESPONSE 22 3|1 Eurosystem monetary policy decisions 22 3|2 Non‑standard measures 22 4| MEASURES TO SUPPORT RECOVERY FROM THE CRISIS 26 4|1 Measures to promote financial stability 26 4|2 Fiscal consolidation 28 4|3 Stimulating growth through structural reforms 31 4|4 International coordination of economic policies 32 Tasks and activities of the Banque de France in 2012 34 1| SERVICES TO THE NATIONAL COMMUNITY 35 1|1 Assessing the economy and its financing 35 1|2 Monitoring companies 37 1|3 Consumer protection and management of general interest databases 38 1|4 Processing of household debt cases 41 1|5 Holding accounts for general government and management of tender procedures 42 2| EUROSYSTEM TASKS 43 2|1 Activity and inflation forecasts in support of monetary policy 43 2|2 Research, statistics and publications 43 2|3 Market operations activities 46 2|4 Banknotes and coins 47 3| THE BANQUE DE FRANCE’S ROLE SERVING FINANCIAL STABILITY 51 3|1 Prudential supervision 51 3|2 Security of means of payment and market infrastructures 52 3|3 Banque de France actions to preserve financial stability 53 3|4 Participation in international regulatory bodies 55 3|5 International cooperation 58 Governance, strategy and management 60 1| GOVERNANCE 61 1|1 Executive bodies 61 1|2 Decision‑making and control bodies 63 1|3 Internal Audit and risk management 65 2| BUSINESS STRATEGY 67 2|1 Transform the Bank by 2020 67 2|2 Continue efforts to strengthen the Bank’s capital structure 70 2|3 Strengthen the Bank’s influence 70 Banque de France Annual Report 2012 3 Contents 3| HUMAN RESOURCES MANAGEMENT 76 3|1 Harnessing demographic changes within the Bank to modernise its organisation 76 3|2 Prevention of psychosocial risks as a key element in preparing and accompanying change 77 3|3 Learning and adapting 78 3|4 As an institution of the French Republic, integrate social responsibility within the HR policy 79 4| FINANCIAL MANAGEMENT: THE BANK’S BALANCE SHEET AND PROFIT REFLECT THE ONGOING FINANCIAL CRISIS 79 4|1 Non‑standard monetary policy measures continued 79 4|2 A marked rise in financial income 81 4|3 Efficient control of operating expenses in a context of robust activity 82 4|4 Strengthening the capital structure and maintaining a high level of payments to the State 82 Sustainable development: a corporate responsibility 84 1| SUSTAINABLE FINANCE AND GREEN GROWTH 85 1|1 Microfinance 85 1|2 Green growth and economic growth 85 2| REDUCTION OF THE ENVIRONMENTAL FOOTPRINT 87 2|1 Reducing our impact on the environment 87 2|2 A marked reduction in greenhouse gas emissions 90 2|3 Improving the Bank’s energy performance and preserving the environment 90 2|4 Green IT 91 3| ECONOMIC AND FINANCIAL EDUCATION OF THE PUBLIC 93 3|1 Economic and financial education initiatives 93 3|2 The Cité de l’économie et de la monnaie 95 4| LEVERS FOR ACTION 96 4|1 Quality approach 96 4|2 Procurement policy 96 4|3 Sustainable development information system 97 4|4 Communication 97 The accounts of the Banque de France 100 1| REPORT ON ASSETS, LIABILITIES AND RESULTS 101 1|1 Assets and liabilities 101 1|2 Breakdown of profit 104 2| THE INDIVIDUAL ACCOUNTS OF THE BANQUE DE FRANCE 108 2|1 The balance sheet and profit and loss account 108 2|2 Notes to the annual accounts 109 2|3 Auditors’ report on the annual accounts of the Banque de France 130 3| COMBINED ACCOUNTS 132 3|1 The combined balance sheet and profit and loss account 132 3|2 Notes to the combined annual accounts 133 3|3 Auditors’ report on the combined annual accounts 136 4 Banque de France Annual Report 2012 Contents Appendix 139 1| Summary of the household debt commissions’ activity reports for the year 2012 139 2| Organisation of the Banque de France at 1 august 2013 146 List of illustrations 149 Table of banknote illustrations 152 Reply form 153 BOXES 1 Current account transactions in France’s balance of payments 14 2 Change in housing starts in France and effect on GFCF 15 3 Wage developments since the crisis 17 4 Household financial behaviour 21 5 Impact of non-standard measures on the real economy and private bond yields in the euro area 25 6 Transition from EFSF to ESM 27 7 Ratification of the Treaty on Stability, Coordination and Governance and transposition into French domestic law 29 8 France’s public finances in 2012 30 9 Euro area labour market reforms 32 10 New survey on mid-tier enterprises 35 11 The Banque de France rating system: a synoptic assessment comprising two elements 37 12 Banque de France rating system: Key data at 31 December 2012 37 13 GEODE 2013: An updated support service for companies 38 14 Household payment incident databases managed by the Banque de France 39 15 Main messages in the first report of the Monitoring Committee for the Reform of Usury 40 16 Make-up of the household debt commissions 41 17 Typological survey of household debt – 2011 42 18 The Banque de France Foundation for monetary, financial and banking economic research 45 19 Securitisation of credit claims as a source of collateral 46 20 TARGET2 and its role in the implementation of monetary policy 47 21 Common Eurosystem Pricing Hub (CEPH) 47 22 Recycling of euro banknotes and coins in 2012 50 23 Exchange of French franc banknotes 51 24 Contribution to the work of the FSB 54 25 Contribution to the work of the ESRB 54 26 the CRD IV “package” 55 27 Changes in French banks’ liquidity in 2012 57 28 IMF FSAP stress tests 57 29 The Banque de France in 2012 62 30 Programmes to modernise the branch network 68 31 Re-engineering information systems for banking services 69 32 A development strategy to ensure an overall level of competitiveness within Banknote Manufacturing 69 33 TARGET2 Securities project 72 34 MAPS project 72 35 The Financial Stability Council 73 36 Measures in the Economic Modernisation Act paved the way for more refined assessment of enterprises 74 37 Implementation of the Single Euro Payments Area (SEPA) 75 38 Hiring at the Banque de France 77 39 Symposium on assisted microcredit 86 40 Banque de France greenhouse gas emissions in 2011 90 41 HPE IT centres: Application of the European Union Code of Conduct on Data Centre 92 42 The French and the economy 94 Banque de France Annual Report 2012 5 Monetary policy, financial stability and support for the economy 6 Banque de France Annual Report 2012 Monetary policy, financial stability and support for the economy uro area growth was weak or non‑existent a gross EUR 1,019 billion in liquidity in euros in 2012 amid pressures on sovereign and through two three‑year refinancing operations and private debt and market fragmentation. cut key rates. The reduction in the deposit facility E rate to 0% caused a trend decline in the Eonia However, the strain eased in the second half of the year overnight rate that continued throughout thanks to decisive measures by the Eurosystem to the second half. Financing conditions for euro area prevent extreme risk premia from forming and steps banks in euros and dollars improved, as reflected by Member States to keep government finances by the reopening of primary bond markets and a under control, bolster growth potential and develop narrower 3‑month euro‑dollar basis swap, which tools to prevent and manage crises. went from –114 basis points (bps) on 2 January to –20 bps on 31 December. At international level, initiatives by the G20 and the bodies in charge of work in the area of financial Faced with persistent market segmentation and stability helped to strengthen international coordination mounting stress on peripheral bond markets, of economic policies and financial regulation. the ECB Governing Council announced its intention, where necessary and under certain conditions, The following analyses and commentaries are based to intervene on sovereign debt markets to ensure on economic data updated at 15 April 2013. the proper transmission of monetary policy. The announcement of the OMT mechanism, combined with the adoption of the European 1| INTERNATIONAL ENVIRONMENT Stability Mechanism (ESM) by Member States and the entry into force of the Treaty on Stability, Coordination and Governance, brought about 1|1 Capital and commodity a pronounced decline in risk premia linked to markets extreme scenarios as well as tighter yield spreads over German sovereign securities (see Chart 1). Non‑domestic investors returned to Spanish and Capital markets Italian markets. Greece, Portugal and Ireland, which were placed under European Union (EU)/ Central banks played a prominent role in 2012.
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