By François Villeroy de Galhau
The Banque de France General Council approved the financial statements for the year ended 31 December 2021 at its meeting of 14 March 2022. The Banque de France’s balance sheet grew from EUR 1,741 billion at 31 December 2020 to EUR 2,037 billion at 31 December 2021. This increase of almost EUR 300 billion, following a EUR 600 billion increase in 2020, means that the balance sheet has expanded by nearly 80% in two years. This is due to the monetary policy measures taken by the Governing Council in 2020 and prolonged in 2021: ramping up the net asset purchase programme (APP), launching the pandemic emergency purchase programme (PEPP), and continuing targeted longer‑term refinancing operations (TLTRO III). Euro‑denominated securities acquired under purchase programmes thus rose by EUR 207 billion and outstanding loans to credit institutions increased by EUR 85 billion. On the liabilities side, this provision of liquidity led to a sharp rise in deposits from credit institutions of EUR 171 billion, while Banque de France euro banknotes in circulation also rose by 8% (up EUR 21 billion).
Net income from activities amounted to EUR 7,055 million in 2021, up EUR 638 million year‑on‑year despite an increase in expenses related to bank refinancing against a backdrop of expanded TLTRO III operations, which bear interest at a lower rate than that for the deposit facility. The increase in the proportion of indexation products in inflation‑indexed purchase programme securities explains this positive trend, as does the negative interest levied on credit institutions’ deposits, which also grew. Operating expenses rose by EUR 154 million year‑on‑year to EUR 1,600 million, after the previous reporting period had benefited from a major provision reversal that had reduced expenses. Setting aside this reversal, operating expenses were down EUR 31 million year‑on‑year. After operating expenses, profit before tax came in at EUR 5,456 million, up EUR 485 million compared with 2020. Against a backdrop of increased risks carried on its balance sheet and linked to the assets acquired as part of the purchase programmes, in 2021 the Banque de France continued to cover its financial risks (excluding exchange rate risk) by making allocations to the fund for general risks, which was increased by EUR 2,800 million to EUR 11.95 billion (following an allocation of EUR 1,150 million in 2020). After accounting for this allocation and corporate income tax, net profit for 2021 came to EUR 763 million, down EUR 1,427 million on 2020.
After taking account of retained earnings, the General Council decided on the following appropriation of distributable profit:
- allocation to the general reserve of EUR 38 million, i.e. 5% of net profit;
- the payment of a dividend to the state of EUR 569 million;
- allocation to the Employee Reserve Fund of EUR 152 million for pension rights acquired during 2021;
- allocation to the provision for investment of EUR 4 million.
Furthermore, in accordance with Decree 2020‑1197 of 29 September 2020 on the withdrawal of capital from the Banque de France Employee Reserve Fund portfolio and given the level of coverage of pension liabilities at the end of 2021, the General Council approved the release of EUR 1,118 million from the Employee Reserve Fund (after EUR 690 million in 2020).
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Letter to the President of the Republic: How can we reduce inflation?
By François Villeroy de Galhau
This Letter is naturally devoted to inflation, which has once again become the prime concern of French citizens and is at the heart of the central bank’s price stability mission. The rise in prices has accelerated significantly over the past year, reaching 6.5% in France at the end of June, a level that is clearly too high even though it remains, after that of Malta, the lowest in the euro area (which is 8.6% on average). But this rise has also changed in nature: it admittedly retains a strong imported component due to the increase in energy and commodity prices, which is being amplified by the shock of the Russian war in Ukraine. In recent months, inflation has nevertheless spread to a wide a range of goods and services, and has also become domestic: “core” inflation, excluding energy and food, has risen to 3.3% in France (and 3.7% in the euro area), well above our 2% target.
Banque de France Annual report 2021 - Key figures
After 2020 saw an 8% drop in France’s gross domestic product, 2021 was the year the economy emerged from the crisis. Conditions nonetheless remained strained on a public health level and were made difficult on an economic level by supply pressures and rising commodity prices. Against this backdrop, what action did the Banque de France take ?
Banque de France Annual Report 2020
By François Villeroy de Galhau
The year 2020 will remain the year of the Covid shock. Threatened by the epidemic, our societies and their leaders reacted with determination: emergency measures were followed by stimulus packages. The Annual Report presents the actions taken by the Banque de France to continue to perform its missions, maintain confidence in the currency and ensure the smooth financing of the economy. For the 9,500 staff of the Banque de France, 2020 was a year of challenges but also a year of pride. The challenge was to switch massively to telework within two days in mid-March, and be present on all the “fronts” and in all the areas where we were expected. But pride because we did our duty in the service of the country and were recognised for it; and pride for having completed our “Ambitions 2020” transformation plan on time despite the crisis. I would like to express my warmest thanks to all the managers and staff of the Banque de France.
Updated on the 25th of July 2024