Paris (AFP)

2End of the suspense for the Livret A: the rate will fall from February to its floor level of 0.5%, as expected by its new calculation formula, announced on Wednesday Bruno Le Maire who intends to stimulate the financing of public policies and encourage the French to diversify their investments.

It would have been "irresponsible and incoherent" to maintain this rate at 0.75% compared to "our policy of investment diversification" and the "thousands of French people who are waiting for social housing", explained the minister during an interview in the daily Le Parisien.

In addition, "this figure takes into account low interest rates and the level of inflation," also defends Mr. Le Maire, who followed the recommendations of the Governor of the Banque de France, published shortly before the announcement of the Minister.

- Finance 17,000 new homes -

A flagship savings product, the Livret A, 202, is now owned by 55 million French people who, in 2018, invested a total of 258 billion euros.

Conceived like a piggy bank supposed to bring back light but surely, the saver can deposit there or withdraw his money at any time, while seeing his remunerated deposits and his profits not taxed. Its cousin, the Sustainable and Solidarity Development Booklet (LDDS) works in a similar way with a lower deposit ceiling, at 12,000 euros.

But setting the Livret A rate, which is also used to finance land use planning, has been a headache for several years for the authorities, who have to juggle the sometimes contradictory interests of the financial institutions that manage part of these funds. , savers and institutional borrowers, such as social landlords, SMEs or local authorities.

All in a context of generalized low rates which complicates the task of making money grow.

"This new rate [of 0.5%] will indeed make it possible to build 17,000 additional social housing units and renovate 52,000 of them each year" but could also finance "thermal renovation, ecological transition or the renovation of hospitals, schools and crèches ", highlights Bruno Le Maire.

- Never under 0.5% -

Responsible for calculating the rate of remuneration for regulated savings accounts, the Banque de France had specified the terms of this new rate setting formula earlier.

Obtained from the average of short-term monetary interest rates and that of inflation over the last six months, the Livret A rate, according to this method alone, comes to 0.23%. This new formula now includes a floor level of 0.5%.

"Therefore, it is the floor of 0.5% which must apply to determine the rate of the Livret A", had recommended the Governor of the Bank of France, François Villeroy de Galhau, via a press release.

This remuneration "will never fall below the floor level of 0.5%" just like that of the Sustainable and Solidarity Development Booklet (LDDS), assures Bruno Le Maire. And "in six months, we will see whether to revise this rate," added the minister.

Another savings product at the regulated rate, the people's savings account (LEP) also saw its remuneration fall to 1% against 1.25%. Its calculation is different but linked to the Livret A rate: it corresponds either to the Livret A rate increased by 0.5%, or to that of the average inflation observed over the last six months - this is the highest figure who is retained.

- "Diversify your savings!" -

In support of this decision, inflation forecasts for the year 2020 which "do not today allow us to anticipate significant factors of increase and (of) monetary interest rates (which) themselves should remain sustainable low ", details the central bank in its press release.

"These two factors combined rule out the prospect of exceptional circumstances," she said.

By aligning itself with the recommendations of the Banque de France, the government is also pursuing the objective it set itself at the start of its mandate to direct French savings to businesses.

A refrain repeated by Bruno Le Maire who urges, in the Parisian interview, households to diversify their savings by placing it in products that the government has tried to simplify such as life insurance Eurocroissance, the savings plan actions (PEA) or the retirement savings plan (PER).

© 2020 AFP