France: Financial System Stability Assessment

International Monetary Fund

No 2025/180, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents France’s Financial System Stability Assessment report. The French financial system has proven resilient to the shocks of the last five years but faces headwinds from domestic and external policy uncertainty and high fiscal consolidation needs. Bank-insurance conglomerates that include four Global Systemically Important Banks dominate the financial landscape, and financial markets have become increasingly complex in the post-Brexit environment. Financial stability risks in France appear contained. Banks and investment funds demonstrate resilience under severe stress-testing scenarios, including a system-wide market shock. High levels of debt in nonfinancial corporates and households are a longstanding issue and warrant further monitoring, as do interconnections between banks and non-banks. Authorities should ensure resources are sufficient to deal with an increasingly complex financial ecosystem. Data quality and monitoring of interconnectedness risks with non-bank financial institutions should be improved. The macro prudential framework and tools should be further strengthened to enhance their effectiveness and avoid any buildup of risks.

Keywords: E. investment fund liquidity risk; investment fund liquidity stress test result; bank-insurance conglomerate; B. bank solvency; bank Performance; Anti-money laundering and combating the financing of terrorism (AML/CFT); Financial sector stability; Stress testing; Mutual funds; Global (search for similar items in EconPapers)
Pages: 72
Date: 2025-07-14
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