The French are dipping into their checking accounts
French households once again drew down their checking accounts in the first quarter, according to a quarterly survey by the Banque de France, while at the same time, the Livret A savings account was filling up.
The amount of idle cash—that is, the outstanding balance of banknotes and coins—and in demand deposit accounts actually fell by 18.5 billion euros between January and March, following an already substantial decline of 14.1 billion euros in the previous three months. Nevertheless, €782.4 billion remained in this form as of March 31, 2023.
This decline is linked to the influx of funds into the Livret A and the Livret de développement durable et solidaire, which attracted 25.4 billion euros in the first quarter and another 9 billion or so since then, according to data shared monthly by the Caisse des dépôts.
It should be noted that, at a net rate of 3% since February 1, these two regulated savings products are far more attractive than the interest rates on demand deposits offered by banks, which averaged 0.04% in June for individual customers. Banks have, however, made a modest effort for businesses, whose demand deposits earn twelve times as much, at an average of 0.48%. Another financial product is also bearing the brunt of this fierce competition from the Livret A: euro-denominated life insurance funds.
These funds have been experiencing a negative net inflow (i.e., benefits exceeding contributions) for several years, and the trend is accelerating: they saw their assets shrink by 15.5 billion euros in the first half of the year, according to figures from the industry association France Assureurs.
