Managing cash flows
All of the State’s cash flows (expenditure and receipts), along with those of local and regional authorities and government-funded institutions (known as “Treasury correspondents”), are centralised in a single account with the Banque de France. Agence France Trésor is responsible for the day-to-day management of this account.
Ensuring the continuity of state finances, in accordance with France’s European commitments
Agence France Trésor is responsible for managing the Government’s cash holdings. This means ensuring that the Government has the financial resources necessary to meet its commitments at all times, regardless of the circumstances.
This imperative stems from Article 123 of the Treaty on the Functioning of the European Union (TFEU). Under the terms of this Article, the Banque de France, which holds the State’s account, is prohibited from granting the State overdrafts. This means that the Treasury Account must show a credit balance at the end of each day.
Cash management that meets the highest international standards
France has introduced a pooling arrangement called "centralisation" to optimise public cash management. Centralisation of public cash holdings is a best practice recommended by international institutions, including the World Bank and the IMF. France has a highly developed system based on the Treasury Account.
In addition to the State, the vast majority of French public sector entities, including local authorities, local and national government-funded institutions and hospitals, are required to deposit their cash holdings with the Treasury. Some entities also deposit some or all of their cash with the Treasury under the terms of agreements. This is the case for the European Union, which deposits some of its funds with the French Treasury. All of the entities that deposit their cash with the Treasury are called "Treasury Correspondents".
The Treasury Correspondents’ deposits are a cash resource for the State. These deposits reduce the State’s borrowing requirement.
Promoting centralisation of public sector cash holdings
Centralisation prevents the build-up of cash and reduces the overall debt of general government. This has a favourable impact on the yields France obtains on the market and reduces the State’s reliance on market financing.
Centralisation is more than a boon for public finances; it also offers benefits to Treasury Correspondents, such as absolute security for their deposits.
Using cash holdings in the taxpayers’ best interest
AFT optimises the cost of cash holdings for taxpayers by ensuring that an appropriate cash balance, including a safety cushion, is on hand to meet expected expenditures.
For this purpose, AFT constantly updates its forecasts of cash flows for the coming year. At the end of each day, it forecasts the cash flows for the next day. All day long, AFT monitors expenditures and receipts in real time.
Centralisation enables AFT to oversee both the State’s financial flows and those arising from the financial activities of each Treasury Correspondent. It relies on a dedicated information system that identifies each flow.
The cash management strategy, designed to produce optimum security for payment execution, means that the Treasury Account generally shows a surplus. AFT invests this surplus on the interbank market every day to reduce the cost of the cash surplus. These investments may take the form of unsecured loans or securities repurchase agreements. AFT offers investments to its counterparties several times a day, depending on market demand.