September 21, 2017

IMF published its staff report and selected issues report in the context of the 2017 Article IV consultation with France. The staff’s assessment reveals that the financial sector risks are mitigated by improved capitalization, but banks and insurers still face economic and regulatory challenges. Directors stressed that banks and insurers need to continue adapting their business models to the low interest environment, new technologies, and evolving regulatory standards.

The staff report highlights that the rise of Fintech could constrain profits, and banks could lose customers in the retail market as a result of service sector liberalization. Potential regulatory changes under Basel III, including the introduction of output floors for banks using internal models, would help enhance the system’s resilience and provide a safety net against model risk, while potentially requiring some French banks to raise additional capital over the medium to longer term, as new regulatory measures are phased in. The recently adopted Sapin II law introduced a new class of senior non-preferred (bail-in-able) debt, allowing banks to comply with new EU regulatory standards. French insurers still face challenges related to the transition to the Solvency II regulatory regime. The authorities noted that the new class of senior non-preferred debt has been a success, providing a transparent approach to meeting the EU minimum requirement for own funds and eligible liabilities (MREL) and total loss-absorbing capacity (TLAC) requirements. The authorities argued that Basel III should create a level playing field and should not impose unnecessarily high output floors for banks using internal models. They favor completion of the banking union and the removal of remaining regulatory impediments to cross-border banking flows in the euro area.

 

The selected issues report analyzes the key features of capital taxation in France, examines the key linkages to the broader tax system, and identifies significant scope for tax reforms that could enhance international competitiveness, efficiency, revenue productivity, and economic growth. The report also examines the external competitiveness in France, reviewing specific indicators of price and non-price competitiveness and presenting empirical findings on the analysis of export market shares in the country and the impact of foreign demand and relative prices on export performance.

 

Related Links

Staff Report (PDF)

Selected Issues Report (PDF)

Keywords: Europe, France, Banking, Insurance, Article IV, Basel III, Solvency II, MREL, IMF

Related Articles
News

EC Amends Regulation Supplementing Solvency II Directive

EC published the Delegated Regulation (EU) 2019/981 that amends the Regulation (EU) 2015/35, which supplements Solvency II Directive (2009/138/EC) on the taking-up and pursuit of the business of insurance and reinsurance.

June 18, 2019 WebPage Regulatory News
News

IOSCO Report Examines Application of International Cyber Standards

IOSCO published a final report that examines the application of the three internationally recognized cyber standards and frameworks by IOSCO member jurisdictions.

June 18, 2019 WebPage Regulatory News
News

PRA Launches 2019 Stress Test Exercise for Life and General Insurers

PRA has launched the biennial insurance stress test and is asking the largest regulated life and general insurers to provide information about the impact of a range of stress tests on their business.

June 18, 2019 WebPage Regulatory News
News

PRA Finalizes Reporting Amendments to Pillar 2 Liquidity Framework

PRA published the final Policy Statement PS13/19 on regulatory reporting amendments and clarifications to the Pillar 2 liquidity framework for banks in UK.

June 17, 2019 WebPage Regulatory News
News

FSB Assesses Implementation of Compensation Standards and Principles

FSB published the sixth progress report on the implementation of its principles and standards for sound compensation practices in financial institutions.

June 17, 2019 WebPage Regulatory News
News

IMF Publishes Reports on 2019 Article IV Consultation with Ireland

IMF published its staff report and selected issues report under the 2019 Article IV consultation with Ireland.

June 17, 2019 WebPage Regulatory News
News

EBA Updates Data on Deposit Guarantee Schemes in EU

EBA published the 2018 data on two key concepts in the Deposit Guarantee Schemes Directive (DGSD)—namely, available financial means and covered deposits.

June 17, 2019 WebPage Regulatory News
News

SNB Updates Form for Reporting Solvency Risk of Counterparties

SNB published the survey (Form Release 5.01) and related documentation for reporting solvency risk of counterparties in the interbank sector (ARIS).

June 17, 2019 WebPage Regulatory News
News

ISDA Studies Variation in Global Implementation of Margin Requirements

ISDA published a paper that highlights the main areas of difference in the implementation of margin requirements for non-cleared derivatives across jurisdictions and makes recommendations on how to resolve these variations.

June 17, 2019 WebPage Regulatory News
News

US Agencies Finalize Rule to Streamline Reporting for Small Banks

US Agencies (FDIC, FED, and OCC) adopted a final rule to streamline the regulatory reporting requirements for small institutions.

June 17, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3265