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France monitors corporate borrowing, but will not hike capital buffer for banks

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France monitors corporate borrowing, but will not hike capital buffer for banks

France's financial stability council will not impose a countercyclical capital buffer on banks at this time, but has a close eye on high levels of corporate borrowing in the country, Reuters reported.

The council, which includes Finance Minister Bruno Le Maire and Banque de France Governor François Villeroy de Galhau, has been scrutinizing record levels of private debt and large amounts of borrowings by large companies that are funding themselves cheaply on the bond market, the March 14 report said.

In December, the council said it could impose countercyclical buffers on lenders, meaning they would have to put aside more capital against their risks. However, it will stop short of this for now.

Speaking to the Paris financial community in mid-January, Villeroy de Galhau said: "If the risks in the credit cycle were to persist — that is to say grow significantly faster than justified by economic fundamentals — we stand ready to do more at any time in 2018, including, if necessary, activating the capital countercyclical buffer."