domestic solvency notice

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In a letter published Tuesday by Les Echos, several associations warned the governor of the Banque de France of the solvency of households in the face of rising energy prices. They are also concerned about the ability of companies to repay loans.

For several weeks, the government has been preparing the French for a very harsh winter, particularly due to rising energy prices. To limit the consequences of this impending crisis, it has implemented a number of exceptional measures. Including the assignment of an energy allowance from 100 to 200 euros to 12 million French, by the end of the year. This aid allows you to pay part of your electricity, gas and fuel bills. It can also be used to carry out energy redevelopment works.

Towards a financial stability crisis with payment defaults

Despite these efforts, a good portion of French people (45%) should have difficulty paying their bills, according to a recent survey by Secours Populaire and Ipsos. The energy crisis thus risks causing a wave of personal bankruptcies. Faced with this gloomy prospect, on Tuesday 27 September several associations sent a letter to the governor of the Banque de France, François Villeroy de Galhau. Objective: to raise the alarm on the possible deterioration of the solvency of households, threatened by the continuous increase in energy prices. Among the organizations that wrote the text are the Abbé Pierre Foundation, Positive Money Europe and négaWatt.

In the letter, the associations explain that with the increase in energy prices, “households are facing budget constraints that can affect their ability to repay the loans and mortgages taken out. This situation could lead to delays or even defaults in payments. On the other hand, the banking sector would be exposed to a financial stability crisis in the event of a systemic entity of this settlement failure. The organizations therefore ask the regulator to put in place urgent measures. All the more so since registrations to the FICP (file of accidents of repayment of loans to individuals) increased in August by 26% in one year.

Interest-free loans for energy renovation

The Banque de France is first invited to grant banking institutions access to targeted information such as DPE (energy performance diagnostics). Hence, it should allow them to integrate household solvency into their prudential rules, as required by loans aimed at improving the energy efficiency of housing. This measure aims to further involve the banking sector in energy renewal, which often represents a very high cost for individuals.

Interest-free loans would be particularly welcome. They would make it possible to make substantial savings after work, thus helping to preserve the solvency of families. In addition to individuals, the signatories of the letter are concerned about the ability of companies to repay the State Guaranteed Loan (PGE). Economic actors not only face the energy crisis, but also face rising production costs and a shortage of human resources. Yep, their defaults jumped to 26.5% in August year-over-year.

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