History

The livret A (formerly savings bank book or booklet series A) is created on 22 may 1818, concomitantly to the Caisse d'Epargne in Paris, at the initiative of Benjamin Delessert, who was industrial and banker. The Presidency of this new institution will be quickly entrusted to Duke François Alexandre Frédéric de La Rochefoucauld – Liancourt³.

Its creation by Louis XVIII motivations were to settle the financial crisis bequeathed by the Napoleonic wars. According to Georges Constantin, during this period, the State has squandered public savings, as sienne³.

In the course o^f the 19th century, the libretto A was also a willingness to initiate, in the perspective of welfare, working populations to the gesture of the deposit in the Bank, at a time where don't exist nor social protection system or accessible to the largest nombre4 savings ^as.

Characteristics of the livret a.

• A single book per person, major or minor. However, simultaneous possession of a booklet and a blue open book both prior to September 1, 1⁹⁷9 (date of entry into force of Decree No. 79-730, August 30, 1979, which has removed this faculty) remains possible. This provision has not been questioned by Act No. 2⁰08-776 of August 4, 2008, to modernize the economy. Updated August 11, 2010, it is possible for individuals who held a livret A (open to the post office or the savings) and a libretto blue open to Crédit mutuel keep (without transferring) these two livrets5^{, 6}.
• Payment to the opening minimum: €10 (€1.5 for a libretto to La Banque postale) ⁵
• Monthly payment: not applicable (free payments),

Ceiling of deposits

The ceiling of deposits for natural persons is €22 950 (article R. 221 – 2 Code monetary and financial) since 1 January 2013^5,7. Partially in response to a promise to campagⁿe8, the Government of the Presidency of François Holland successively brought the initial ceiling of €15 300, previous ceiling since 1986, to ^€19 125 October 1, 2012 and €22 ⁹50 on 1 Janu^ary 20139, an increase of 50%. If the latter had evolved with inflation since 1986, it would have been brought to more than €25 500 in September 2012.^{[réf. souhaitée]}

The ceiling of deposits for mutual and cooperation institutions, charities and other similar societies (associations Act 1901) is €76 500 (article R. 221 – 2 of the monetary and financial Code) ⁵.

The ceiling of deposits for moderate rent housing and real estate credit agencies: none (unlimited deposit) (article R. 221 – 9 of the monetary and financial Code)^{[réf. souhaitée]}.

Article L221-1 of the monetary and financial Code does not explicitly prohibit the opening of a libretto by a. corporations (LLC, SCI) within the limit of the ceiling of right common (€19 125). Indeed this article only provides that the booklets are nominative and the same "person" can be holder of a single booklet or blue. The 'person' can be physical or moral. In the case of legal persons, associations and bodies HLM enjoys a higher deposit limit, which prohibits nor the application of the ceiling of law, common to other legal persons. However, in practice, financial institutions refuse the creation of a booklet to the SARL and SCI. In fact, the project of modernization of the economy, in the version of April 28, 2008, article 39, proposes to amend article L. 221 – 3 of the monetary and financial Code as follows: "the livret A is open to individuals, to associations mentioned in 5. Article 206 of the general code of taxes and moderate rent housing agencies.

Once the ceiling reached, can no longer proceed to additional payments until a withdrawal was not made in advance; only the interest may continue to credit the account above the limit. The interest calculation is done on the lump sum, even after exceeding ceiling; Thus, a livret A with €23,000 relate, at the rate of 1% to €230 (€23,000 base) and not €229.5 (base of €22 950, the maximum payments amount to ¹ January 2013).

Interest rate

The nominal interest rate is 0.75% for net since Au^gust 1 2015¹⁰.

Interest shall be calculated in accordance with the rule of the Fortnights (twice per month 1 and 16). The interest is exempt from all taxes and dues sociales⁵.

Force majeure, a decree in Council of State on the report of the Minister of the economy and the Minister responsible for the post office may limit reimbursements by half to 2% of the maximum allowed of deposition on the A11 bookl^et.

To close a libretto, it must make a request in writing or in person at the Bank that manages the libretto, attach a RIB of the account on which transfer money from the booklet has, and the closing is done in days.5 15^{, 12}.

The booklet has being a regulated savings product, the limit values and nominal interest rate can be modified by decision of the Government. Thus, the possible updating of the nominal interest rate occurs according to a biannual rhythm^, August 1 and ^February 1 of each year.

The livret A in figures

The livret A is placing the most popular savings with the French with 60 million booklets in August 2010 as a result of the opening of the placement to all sectors¹³.

Before the opening of this booklet was reserved for institutions of the post and the Caisse d'Epargne, Crédit mutuel with an equivalent with the blue booklet. In 2008 there were nearly 46 million livrets A open, which represents about three French on quatre¹⁴. However, the Bank and similar accounts (FICOBA) file mentioned the figure of 37 million persons, which would amount to three French on cinq¹⁵. The difference of 9 million is attributable to the multi-detenteurs (which is forbidden by the law, except books opened before 1980), to legal persons not identified by FICOBA such as associations, social organizations of Habitat, etc.

In 4 years, thanks to the financial crisis of 2008 and the increase of the ceiling of the livret A from 2012, the collection would have evolved 85 Md€ (between December 2008 and December 2012), bringing the total outstanding to 250 Md€, an average of about 5,000 euros per livre^t2.

The collection grew mainly by the contribution of the richest French following the raising of the plafond¹⁶.

The cost of the tax exemption of the livret A was EUR 300 million in 2012¹⁶.

End of 2012 the number of booklets that the balance is less than €1,500 accounted for 64.2% of the total of the booklets. Only 2.3% of the livret A were credited with a balance greater than the plafon^d16.

Calculation of interest

A passbook or savings account interest are calculated per fortnight. A calendar year is made up of 24 Fortnights (approximately 15.2 days per fortnight), because the rule used each month has two fortnights, beginning the 1s^t and 16th of each month. Interests are therefore calculated twice by months⁵.

The calculation is simple, since it is sufficient to multiply the rate of the booklet by the balance of the booklet. As the rate is annual and interests are not capitalized during the year, should divide this rate by 24 to calculate the interest generated in a half.

Thus the formula is: interest of fifteen = balance of the × booklet

Deposits for fifteen interest over the following period, that is their value date is the first day of the fortnight following (1st of the following ^month for the second half of the month, or 16 of the current month for the first two weeks) ⁵. Conversely, any withdrawal is considered to have been made at the beginning of the fortnight in question (its value date is the first day of the current fortnight). Therefore, the interests that could run the half up to the date of withdrawal are not counted. The balance of the book to be considered for the calculation of interest must therefore take account of these value dates.

If several deposits and withdrawals are carried out successively during the same fortnight, the concerned balance may therefore be lower than the minimum balance in the account during the fortnight (calculated without taking into account the dates of value). This is illustrated by the following case:

In this table, the last column corresponds to the balance on the day the day, without taking account of the value dates.

The balance taken into account for the calculation of interest income during this fortnight is not the initial 2300 balance or the minimum of 1,700 balance, ^but balance at January 1 calculated using value dates, i.e. 2 300 – 500 – 400 = 1 400. Thus, with a fictitious annual rate at 2%, this booklet will generate 1 400 / 24 × 0, 02 = 1, €17 of interest during the first two weeks of January. These interests are however capitalized to Januar^y 1 of the following year, and thus themselves productive interests at this time there.

If no movement is made on the libretto during the next fortnight (from 16 to 31 January), the balance taken into account for the calculation of the interest earned during this fortnight will be the balance on January 16, i.e. €1,700. Thus, with a fictitious annual rate at 2%, this booklet comes to generate 1 700 / 24 × 0, 02 = 1, €42 interest during the second fortnight of January. These interests are however capitalized to Januar^y 1 of the following year, and thus themselves productive interests at this time there.

If for a fortnight the balance of the libretto based on the dates of value is negative (which can happen, although the balance of the livret A, calculated using the dates of operation, cannot be negative), it gets a negative interest for the fortnight. At the end of the year, every fortnight negative or positive interests are added, and if this amount, referred to as interest earned, is positive, it is added to the booklet on 1 ^January of the following year. If it is negative or zero, vested interests are reduced to zero (vested interests can never be negative on a savings product). By the set of dates of values, it is therefore possible to have interests acquired zero for a year, even if the balance of the book has always been strictly positif¹⁷.

In order to maximize the amount of interest, and in particular avoid generating negative interest on fifteen, therefore do not perform operations in the opposite direction during the same fortnight.

Collection and use of funds of the livret A

Complex system with several actors

Historically, the State has always hoped that the livret A collection is secure, that is sheltered from financial crises. Without this security, it would be possible to attend the bankruptcy of many savers, if for example the Bank which was entrusted with the money of the livret A should go bankrupt or the french State to fail.

For many years, these funds were therefore collected by the distributing networks and centralized at the Caisse des Dépôts et consignations, within a Directorate called savings, independent accounting. This distinction allows do not "mix" money from the Caisse des dépôts issue of business propres18, ¹⁹ and that of its mandates (with booklet).

This centralization is the subject of a commission paid by the Caisse des dépôts at collection systems.

The Caisse des dépôts then uses these funds to finance missions of general interest, and particularly social housing (HLM).

This mechanism is still topical despite the profound revision of its terms, established by the law of modernization of the economy of the Fillon Government in 2008.

Distribution and collection of the livret a.

Since its creation in 1818 and until December 31, 2008, the livret A will have been distributed by two types of institutions:

• From the origin by savings newly created;
• For the years 1875-1879 by the different post offices in the title of the national savings bank, absorbed in 1990 by what would become the Postal Bank.

Crédit mutuel distributes Meanwhile a "blue booklet" with almost identical characteristics (blue booklet is endorsed, but it is the Caisse des dépôts centralizing this resource which recognises in its result the contested levy, which has no impact for the investor^{[réf. souhaitée]}).

This causes tension on the part of the other networks of banks which cannot distribute it and speak of distortion of competition. Whereas this system constitutes an obstacle to freedom of establishment and the free provision of services offered to all banks in the European market, the European Commission asked may 10, 2007 at the France open these products to competition within a period of 9 months.

The distribution of the livret A is in June 2008 discussed in Parliament, and it is open to all banking institutions since J^anuary 1, 2009. April 12, 2009, Credit Agricole announced they intend to continue the savings for "barriers to transfers of the livreta.^{[réf. souhaitée]}

Centralization of funds to the Caisse des dépôts

Before J^anuary 1, 2009

For many years, all the funds livret A and blue collected by the distributing networks was totally centralized, the Caisse des Dépôts et consignations.

The rate of commissioning served by the Caisse des dépôts reached in 2007 the average of 1.12 ^%20:

• 1.3% for the Postal Bank;
• 1 percent for savings;
• 1.1% for Crédit mutuel (excluding tax).

Since Ja^nuary 1, 2009

The law on the modernisation of the economy entering into force ^on January 1, 2009 has, in trivialising the distribution, introduced new rules centralization and commissioning of the distributing networks.

Fluctuating centralization needs

Banking institutions are required to centralize approximately 65% of the stock of the livret A and LDD with the depots21 Fu^nd. This rate is however facing a legislative floor, which provides that the centralization of funds should at least be equal to 1.25 times the amount of the loans granted by the Caisse des dépôts social housing and the ville22 poli^cy.

This rate of centralization can be subject to regulatory amendments, after consultation with the Commission's monitoring of the Caisse des dépôts. Thus, in July 2013, stakeholders agreed on a reduction of 20 Md€ centralized funds, in Exchange for a decrease in the rate of commissioning of collection systems of 0.1% ²¹.

To allow adaptation of banking institutions to the new modalities of centralization, a transitional regime introduced by the law of modernization of the economy (LME) (IV of article 146). The terms of this plan are specified by Decree No. 2011-275, modifie23, March 16, 20¹¹.

Commissioning homogenized term

In respect of the distribution of the livret A, banks receive a commissioning, which rises since July 2013 t^o 0.4% 24 declining regular since law LME (0.6% in 2008).

To enable historical networks to adapt to the new competitive environment, the rate of commissioning served to the latter by the Caisse des depots will be gradually decreased, so that it reaches the horizon of 2022 rate commun²³.

The Postal Bank will benefit as a special status. Ensuring banking accessibility mission, it will benefit from a surcommissionnement remaining to be defined on the basis of the actual cost of this missioⁿ²5.

Use of centralized funding to the Caisse des dépôts

Social housing loans

The livret A allows primarily to finance social housing: the Caisse des dépôts ready social organizations of habitat (OPAC, public offices of habitat (OPH), business social of habitat (ESH ex-SA HLM)…) of funds indexed on livret A at privileged rates. For example, the rate of the rental loan for social use (more) is at A^ugust 1, 2009 equal to 1.85%, or book A + 0.6% ²⁶. In late 2007, the savings (excluding refinancing) lend 88 Md€ (funds booklet has, but also LDD, LEP…, in financing used of:)

• Capital projects: 3 Md€
• Housing programs: Md €84, including:
  • Very social: 4 Md€
  • Rental: 47 Md€
  • home improvement: 5 Md€
  • rental intermediates: 6 Md€
  • urban projects: 2 Md€
  • urban renewal: 4 Md€
• Various projects: 1 billion€

Financial investments

The booklet has resource costs to the Caisse des dépôts averaged the rate of the livret A + ¹.12% 20, in August 2008 the rate of 5.12% (4% + 1.12%). The lending rates are lower than the cost of the resource, it follows a bilanciel imbalance that does not allow savings funds to lend the whole resource booklet: a certain amount must be wisely invested on the financial markets to clear a higher profitability, while maintaining a controlled risk.

In late 2007, the portfolio of 114 Md€ decomposed as:

• Actions: 11 Md€
• Bonds: 67 Md€, including:
  • inflation (OATi): 20 Md€
  • fixed > 5 years: 8 Md€
  • fixed rate of 2 to 5 years: 10 Md€
  • fixed rates from 6 months to 2 years: 29 Md€
• Short term and related occupations (Euribor 3 months, for example): 36 Md€

Historical rates and ceilings

History of nominal interest rates

History of ceilings

Nominal interest rate

The Government of Jean-Pierre Raffarin had decid^e34 to set up an automatic calculation of the nominal interest rate formula, in order to avoid the intervention of political decisions. The latter was indeed determined in its discretion by the Government in place.

The rate of the livret A conditioned by elsewhere that other regulated savings products: popular savings, libretto by sustainable development, housing, young booklet savings account and blue booklet (distributed by Crédit mutuel until December 2008) mainly.

Rate before February 2008

The ^July 1, 2004 and until end of January 2008, the livret A rate set by an automatic formula calculated based on two indicators:

• the average Euribor 3 month monthly rate for month m-1 (respectively December and June) ³⁵, expressed to two decimal places;
• the annual rolling inflation rate, given by the index INSEE of the consumer prices excluding tobacco for month m-1 (respectively December and June) 35, ^expressed to one decimal place.

The found result is increased by 0.25% and rounded up to the nearest 0.25%. This final figure gives the rate of the livret A. This formula allows the Bank of France to propose twice in the year (mid-January and mid-July) the updating of the livret A rate.

Coupon from Februar^y 1, 2008

Since Febr^uary 1, 2008, a new formula for calculating the rate is put into place³⁶. The rate is equal, after rounding to the quarter point nearest or failing in the highest quarter, at the higher between:

• the average arithmetic between, on the one hand, half of the sum of the monthly average of the Euribor 3-month with the monthly average of the Eonia (expressed to two decimal places) and, secondly, inflation in France measured by the variation over the last twelve months known index INSEE of the consumption of all prices off tobacco households (expressed with one decimal place);
• inflation plus a quarter point.

Either:

The data used are those for the last month for which these data are known.

Cases where the formula was not applied

However, this formula was not applied during the revision of the rate of F^ebruary 1, 2012. Indeed, inflation to remember of the month December 2011 (last known) was 2.4% which would lead to enhance the rate of the livret A at 2.75%. But the Fillon Government decided to maintain this rate to 2.25%.

A year later, while annual 1.2% inflation should have resulted in a rate of 1.50% from February ^1, 2013 in the case of the application of the formula, the economy Minister, Pierre Moscovici, decided to lower the rate by half a point to 1.75% ³⁷.

Six months later, while annual inflation should lead to a 1% rate from August 1, 2013, in the case of the application of the formula, the economy Minister, Pierre Moscovici, decided to lower the rate on that half a percentage point ^to 1.25% 38, which was then its lowest historical rate.

Similarly, to Februar^y 1, 2014, while the Governor of the Bank of France advocates to lower the rate to 1% and that the strict application of the formula would lead to lower it to 0.75%, the Minister decides to maintain it at 1.25% ³⁹.

Examples of calculation

Example of calculation of the nominal interest rate of the livret A (figures for a calculation a^{t F}ebruary 1, 2008)

• Monthly average of the December Eonia 20⁰⁷40: 0,038761905 (or 3.88%)
• Monthly average of the Euribor 3 month of December 2⁰⁰741: 0,048404286 (or 4.84%)
• Price (CPI), series off tobacco households consumption index, December 200⁷⁴2: 0,025266309 (2.5%)

Rate calculated from the formula up to February 2008:, rounded to 4%

Rate calculated from the formula used since February 2008:, rounded down to 3.5%

Recommendations for the calculation of the rate

Report Walnut-Nasse (2003)

The report on the balance of savings funds by Christian Noyer and Philippe Nasse (' report Walnut-Nasse "), J^anuary 200318 proposed a formula respecting everyone's interests (savers and borrowers financing missions of general interest, including social housing), by indexing"a little above inflation", but"a little below, short-term interest rates". The recommended formula became: 2/3 of the rate of pay of the deposits of the European Central Bank + 1%, rounded to the nearest 0.25%.

This formula ultimately was unsuccessful.

Camdessus report (2007)

The report of the mission on the modernization of the distribution of the livret A and the circuits of housing finance office of Michel Camdessus ("Camdessus report"), handed over to the Government of François Fillon in December 200⁷¹9, proposed as a formula for calculating the average arithmetic mean of the Eonia and inflation, according to the rules for calculating deductions ^from February 1, 2008, with a floor to Inflation + 0.25%.

The Euribor 3-month component eventually was maintained in the new formula, while integrating the Eonia reference.

Livret A, other booklets and term accounts

These three forms of monetary savings, which are not securities but rather savings bank accounts, values have in common their liquidity, even if a term account is subject to structuring or penalties for release anticipe⁴³.

Other booklets were previously answered by traditional banks to the monopoly of the distribution of the livret A. With the trivialization of the distribution (see), the interest of the banks lies in conservation, in their balance sheet, of the funds. Other booklets are available with higher gross (excluding tax), whose net rate (tax deducted) is, depending on market conditions, sometimes higher than the rate of regulated savings.

Term accounts are placed on the financial markets through the Bank or used for its own account. According to durations of placement, proposed rates vary, mainly the Euribor.

In the case of low real interest rates (indicator of competitiveness of the livret A), super booklets crude rates are more than enough high so that once the tax deducted, they can exceed that of the livret A. The arguments put forward are now ceilings higher entitlements and the availability.

Term accounts found in them an audience: booklet rate being anchored by inflation, just that the term account rate significantly higher than this inflation so that its net rate is interesting and no payment ceiling.

Reviews

Certain terms of the livret A are critiquees44^{, 45, 46, 4}7:

• The livret A is totally tax-free, including CSG and CRDS. Therefore, certain tax revenues are not perceived by the State or the secu⁴⁸.
• The livret A has a facialement low, but very high for several years if compared to comparable products (products derived from the money market or bank books). It attracts so many savings, at expense of other products, sometimes over the longer term (such as life insurance).
• The livret A is partly centralized, the Caisse des dépôts (at 65%). Any new increase in the stock livreta deprives the banking establishment of a portion of the savings of his client, while allowing the Caisse des depots to recover for its own missions.

The issues of actors are multiple:

• for the State, it is:
  • retain a role of arbitrator enabling a consensus between the issues of the different actors. The wish of the president of the Republic to double the amount of the ceiling of the livret A has partially broken balance that prevailed until now. To the chagrin of Bercy, the France49 Ba^nk or Caisse des depots, which did not identify the objectives pursued by the President.
  • do not cut any of its creditors. Indeed, a significant part of the State debt is purchased by the Caisse des depots with the money of the livret A.
• for banks, this is to recover the money of the livret A, to restore its competitiveness, beset by:
  • the agreements of Basel III, which imposes additional prudential rules and requires a more consistent liquidity;
  • margins on booklet has they consider insufficient (0.5% rate of commissioning for the collection), with regard to its usual generating and less consumers of liquidity (SICAV, FCP, life insurance, etc.).
• the Fund deposits, Manager of the funds of the booklet, mandated by the State, it is:
  • ensure that Government arbitration does not call in question its mission of funding;
  • preserve the role it provides for nearly a century.
• for the HLM world, ensure that it will benefit from the long-term resources, good markets and available, for its construction business, rehabilitation, development, policy of the city.
• for communities, benefiting from 2013 a multi-year envelope of 20 Md€ 50, t^o ensure that these funds are well allocated to their account.
• for investors, a net rate high, with the highest ceiling.

Feeling their menaces51 is^sues (the doubling of the ceiling has "sucked" many of the french savings: 15 Md€ on the only first half of 2013) ⁵2, several bank lobbies have denounced the doubling of the ceiling of the livret A and benefited from this window to challenge the use of the booklet has:

• Philippe Crevel (circle of investors), considers that the money placed on the livret A contributes to the economy or the growth and constitutes a "waste" while there is 'a lack for equity in SMEs that do not invest enough to position themselves in the premium markets' ⁵³.
• The French Banking Federation (FBF) criticizes the use of the funds managed by the Caisse des dépôts. According to her, the funds available for the financing of social housing "are not fully used today" and raising the ceiling of the livret A would prevent banks strengthen their capital before the entry into force of the new regulatory framework of Basel III in 2013. The FBF said that "should be at least to review the rate of centralization at the Caisse des dépôts for allowing banks to retain the means to lend to their clients' ⁴⁴.
• Financial rating agency Standard & Poors (S & P), in a note published in June 2013, estimated that the livret A is "prejudicial" for French banks because it deprives them of deposition to reinforce their solvency and liquidity ratios, as required by the Basel III regulations. S & P the livreta creates even "a distortion of market', as 'the regulator shall determine the rate of pay of the livret A by using a formula which, in general, positioned above the market rate' ^45.46.

The reaction of stakeholders to the challenges opposed to these banking lobbies is essentially based on:

• the inability of banks to prove the use of the funds which they have on their balance sheet, including in terms of business financing, since they are accused since 2009 no longer lend to the PME5^{4, 55}.
• criticism of the questioning by Basel III, insider banks due to the crisis of subprimes whose responsibility goes to the banks for part.

Under this situation, the banks, the State and the Caisse des dépôts engaged in negotiations which resulted in July 2013 ^a56:

• a providing of banking networks of 30 billion euros of resources centralized in savings funds. These resources will enable the banks to pay more for the financing of the economy, primarily for the benefit of small and medium-sized enterprises. The requirements of transparency in the use of these resources will be reviewed on this occasion.
• to reduce the cost of the resource savings funds, including the financing of social housing, banks will lower their rate of 0.5 to 0.4% commission.

Notes and references

See also

Bibliography

• Georges Constantin, the Livret A: A history of the people's savings, Caisse des dépôts and consignations (ISBN 2-911144-05-8) and La Documentation française (ISBN 2-11-004209-5), Paris, 1999, 294 p.
• Séverine de Coninck, the savings booklet (1818-2008). A French passion, Paris, 2012, Economica, 409 p. (ISBN 9782717864328)

External links

• Monetary and financial code (legislative part, book II, title II, chapter I, section 1)
• Report 2012 regulated savings Observatory published by the Bank of France
• The web page of the documentation economy-Finance (CEDAW) Centre devoted to developments in the legislation of the booklet has
• Evolution of the stock of the livret A and other passbooks, on fbf.fr
• Study of Finance & Strategies relating to the cost of the trivialization of the booklet has
• A booklet on service – public.fr