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Bank of France Says High Debt Puts Financial System at Risk

  • Low interest rates, rising credit risk weigh on banks’ profits
  • Extended lockdown would make it harder to pay off loans
France's Central Bank building in Paris. 

France's Central Bank building in Paris. 

Photographer: Cyril Marcilhacy/Bloomberg
Updated on

Rising corporate debt and the prospect of further Covid-19 lockdowns pose a systemic risk to France’s financial system that may rise in the coming months, according to the country’s central bank.

Debts of non-financial companies are now the greatest vulnerability in the system, the Bank of France said in its semi-annual review of financial risks. While the second lockdown starting in November didn’t hit some companies as severely as the first, a slow economic recovery will make it tough for some to pay off debts built up since the start of the crisis.