France: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis

International Monetary Fund

No 2025/241, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical Note focuses on systemic risk analysis as part of Financial Sector Assessment Program in France. The French financial sector has proven resilient to the stress events of the last five years but faces some headwinds from domestic and, like in many other countries, global uncertainty. Large and internationally active banks have high capital and liquidity buffers and have adjusted to the increase in interest rates. Solvency stress tests show that French banks are resilient to various combinations of shocks under severe macro-financial scenarios. Macro-prudential counterfactual analysis based on solvency stress tests were conducted to help evaluate and calibrate the policy framework. Liquidity buffers remain high in the French banking system and are resilient to various funding and market shocks. Investment funds can withstand redemption shocks. Stress testing of open-ended bond funds, mixed funds, and money market funds suggest they have sufficient liquidity to withstand plausible redemption shocks. Non-financial corporates are vulnerable to adverse macroeconomic shocks consistent with those of bank stress tests while most households remain able to service their debt under the same scenarios.

Keywords: cash flow; coverage ratio; G. solvency stress test result; B. bank Contagion analysis; bank contagion stress test; bank performance overview; credit Shock; performance overview; aggregate capital ratios; Securities; Stress testing; Mutual funds; Government securities; Financial sector stability; Global; Europe (search for similar items in EconPapers)
Pages: 142
Date: 2025-08-29
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