Trésor-Eco
Measuring France’s Financial Vulnerability
The macroprudential policy aims to safeguard the proper functioning of the financial system as a whole. In France, the policy is implemented by the High Council for Financial Stability (HCSF). The indicator of financial vulnerability quantifies the extent of vulnerability at a precise instant and compares it with previous periods. It is the French Treasury’s in-house instrument for assessing financial stability which is also used with regard to the HCSF.
Macroprudential policy strives to limit imbalances in the financial system with an eye to forestalling financial crises or mitigating their severity. In France, the High Council for Financial Stability (HCSF) has been tasked with managing this policy since 2013. To do so, it has a number of resources at its disposal, one of which is the countercyclical capital buffer. To determine its measures, the HCSF examines a set of quantitative indicators and relies on expert judgment.
In looking to enhance its monitoring and analysis of financial stability, the French Treasury (DG Trésor) has established a composite indicator of the vulnerability of the French financial system which incorporates 17 macro-financial variables in five categories – using a machine learning process – tying them in with previous periods of extreme stress.
The indicator accurately captures both identified periods of vulnerability that have affected France’s financial landscape (subprime and euro area crises, COVID-19 pandemic) and the vulnerability caused by recent resurgence of inflation.
In recent times, France’s financial vulnerability indicator has not flagged up major upward pressure on the aggregate risk. Private debt-related risks have diminished although they remain a source of vulnerability. However, since 2024, financing conditions on the markets and real estate market have played an accommodative role. It should be noted that some data for the period subsequent to Q3 2025 has not yet been published. This means that the forecasts do not capture the full effects of the conflict in the Near and Middle East.
