April 25, 2018 / 7:59 AM / a month ago

France to consider curbs on credit growth in June - central bank chief

PARIS (Reuters) - France’s financial stability council will consider whether additional measures are necessary to rein in rapid credit growth, Bank of France governor Francois Villeroy de Galhau said on Wednesday.

FILE PHOTO: Bank of France Governor Francois Villeroy de Galhau listens to questions during a Farewell Symposium on ultra low interest rates and challenges for central banks, for Bank of France Former Governor Christian Noyer in Paris, France, January 12, 2016. REUTERS/Philippe Wojazer

The country’s High Council for Financial Stability has been concerned about record levels of private debt and heavy borrowing by large companies that are financing themselves at rock-bottom rates on the bond market.

Speaking at a conference about non-bank finance at the French central bank, Villeroy said that credit to firms and households has been growing close to six percent a year.

“At the next meeting of the High Council for Financial Stability in June, we will look at whether additional measures are necessary as a result,” Villeroy said.

The council, which includes Villeroy and the finance minister, took the unprecedented step in December of setting a cap on banks’ exposure to the most indebted borrowers, which is due to become effective late this year.

The council said at the time in December that it could additionally impose a counter-cyclical buffer on banks, effectively requiring them to hold extra capital against their risks, if corporate borrowing did not slow.

Reporting by Leigh Thomas; Editing by Sudip Kar-Gupta

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