The Livret A, a popular savings account among French savers, is facing a “wealth problem” due to an excess of funds. The amount of money in the Livret A, Livret de développement durable et solidaire (LDDS), and Livret d’épargne populaire (LEP) has reached 420 billion euros, and close to 650 billion euros when including the other two accounts. This increase is attributed to the high savings rate during the Covid-19 pandemic, as well as the rise in interest rates for these regulated accounts in 2022 and 2023. Roughly 40% of the deposited money is retained by the bank and must be used for various purposes, such as lending to small and medium enterprises, financing the energy transition, and supporting social and solidarity economy projects.
Despite the massive amount of money in these accounts, the funds are not idling. A portion of the funds is held by the bank, with 40% for the Livret A and LDDS, and 50% for the LEP. The banks are required to use these funds, excluding those from the LEP, for lending to SMEs, supporting the energy transition, reducing carbon footprint, and promoting social and solidarity economy initiatives. The remaining funds are centralized at the Caisse des dépôts et consignations (CDC) in the savings fund. As of the end of 2023, the regulated savings fund had an outstanding balance of 370 billion euros, with an additional 16 billion euros in equity. A significant portion of this money is used for social housing and urban policy, while the rest is invested in bonds and stocks.
The director general of the Caisse des dépôts, Eric Lombard, has expressed support for using the funds to finance projects such as the nuclear energy revival proposed by Emmanuel Macron. The CDC participates in discussions regarding financing methods for such projects. Lombard has stated that the savings fund has abundant resources and can provide loans for new activities, including long-term loans up to eighty years. Despite this, Emmanuelle Cosse, the president of the Union sociale pour l’habitat, which represents social landlords, urges caution. She emphasizes the need for EDF, the energy company, to adhere to the conditions of the savings fund loans, as any deviation from the established rules may not be acceptable to the social housing sector.
The surplus of funds in the Livret A and other regulated savings accounts has sparked discussions on how to utilize these resources effectively. While the funds have contributed to financing social housing and urban development projects, there are concerns about diverting these funds to support other initiatives, such as nuclear energy. The reluctance and conditions set by stakeholders, including social landlords like EDF, highlight the complexities of managing and allocating these substantial sums of money. As the debate continues on the optimal use of the excess savings, the balance between supporting social projects and stimulating economic growth remains a critical consideration for policymakers and financial institutions in France.
