Roche & Cie

New calculation formula for the Livret A

The French government has recently decided to reconsider the formula for calculating the Livret A rate.

This willingness to restructure was justified by the widening gap between market rates and the Livret A rate tending to penalize the social housing sector, which is financed in part by the deposits made on this booklet.

At present, the interest rate for this regulated book is calculated on the basis of the greater of the values between inflation plus 0.25 percentage points and the average between inflation and the Eonia Euribor 3 months.

Livret A

Livret A

Definitions:

The Eonia rate is the interbank interest rate for the euro area with a one-day maturity.

Euribor is the benchmark of the money market in the euro area.

The calculation formula will then undergo two major modifications:

– the Eonia, Euribor and inflation indices will be smoothed over six months in order to avoid any sharp variation in the Livret A rate;

– the 0.25 percentage point increase in inflation will be suspended in certain circumstances, especially when the gap between inflation and monetary rates is greater than or equal to 0.25 percentage points.

According to the authorities, this reform is expected to enter into force by September 2017.

Until that date, Livret A should maintain its current rate of 0.75%.