The latter would operate as a clearing house

Like its European neighbors, the France will develop emergency of a plan of support for its banking sector. The Government must consider a Bill to that effect as early as this afternoon at a Council of Ministers of two days, after which Nicolas Sarkozy will detail the provisions. The text, very short, should be discussed at the meeting tomorrow national and Wednesday in the Senate. "All decisions will be effective before the end of the week", said Nicolas Sarkozy yesterday. In announcing last Wednesday, the creation of a society of participation of the State ("EPPS") in the banks, the Prime Minister, François Fillon, had specified that the guarantee of the State to raise funds would be made by Parliament through an amendment to the Finance Bill. But this time was far too long, so it was agreed in the meantime at European level that each State has a plan of action, now, declining at the national level the principles actés yesterday evening by the Eurogroup.

The French plan is available at several levels. A recapitalisation of the banking institutions may well be carried out through the EPPS, if need be, as what has been done for Dexia. If the Government ensures that it will not be used in the short term, the French banks may need in the medium term (see below). The law should set a ceiling of several tens of billions of euros to the underlying funds. Second floor, and main innovation: another specific structure in place will be created to facilitate access of banks to refinance. "The money circulates more there a crisis of liquidity as when the blood clot in a healthy body", justify the Budget Minister, Eric Woerth. On this point, the French plan is not the British plan based. In other words, it is not to provide a State guarantee on all of inter-bank refinancing operations.

A budgetary collective

French banks currently suffer from the fact of not being able to bring certain assets as security to the European Central Bank (ECB) to take advantage of its financing, such as real estate credits that they give to individuals. The idea is therefore to allow banks to make these "collateral" to the ad hoc structure. The latter would operate as a clearing house. With a State guarantee, it would then seek funding markets, she re - lend itself to banks "in the conditions of market," said the head of State. "This is not a gift to the banks," he insists, "asked clear commitments to increase the volume of credits to households and SMEs. This system will obviously need to also be capped to obtain the approval of Parliament. The needs will reach hundreds of billions of euros. But this will not impact on the budget deficit. The new structure will be "a public institution or a company, for example a company 100 owned by the State", says Philippe Marini (UMP), rapporteur of the Budget in the Senate. Finally, a part of the text should be specifically devoted to the guarantee provided by the State for new financing of Dexia. It should be up to EUR 55 billion.

Technically, the project presented today Act is a budgetary collective since the LOLF imposes that the guarantee of the State is validated by an act of finance. But it will not stimulus measures which would alter the deficit include. "The Government has no intention of changing the budget", insists the budget rapporteur in the National Assembly, Gilles Carrez (UMP).