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<p>Finance has profoundly evolved since its inception and especially in recent years: development of environmental or social criteria, arrival of blockchain, etc. At the same time, behaviors have evolved with the rise of ETFs, the rejuvenation of investors, and the reduction in holding periods for securities. In the current political context, radically opposed visions clash. Is finance really viable in France?</p> 
<h2 id="politicians-are-again-attacking-finance">Politicians are (again) attacking finance!</h2> 
<p>French society is currently marked by deep divisions, particularly between proponents of a more or less liberal economy and those who defend a more supportive and equitable model. Social movements, protests against pension reform, and debates on tax justice illustrate these tensions well.</p>
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<p>From a more liberal perspective, some politicians advocate for a market economy with minimal state intervention. “Liberal” policies propose deregulation measures and tax cuts to stimulate economic growth. Consequently, apart from a few politicians, liberals are not represented in France. It is rather a case of ““ess intervention.”</p> 
<h3 id="strong-politicians-what-positions-do-they-take-on-finance-strong"><strong>Politicians: what positions do they take on finance?</strong></h3> 
<p>Conversely, interventionists advocate for wealth redistribution and increased regulation of financial markets to avoid “excesses” and “protect” citizens. For instance, the Nouveau Front Populaire proposes a “strengthened” tax on financial transactions. Similarly, Emmanuel Macron proposes expanding France’s financial transaction tax to Europe. We should note that this tax applies only to equity investments aimed at France. Surprisingly, even a large part of the LR party <a href="https://www.assemblee-nationale.fr/dyn/16/scrutins/1785" target="_blank" rel="noreferrer noopener">supports</a> expanding the base of the financial transaction tax to inter-day transactions. This example reflects the general direction of the finance debate in France quite well.</p> 
<p>Strengthening this tax would certainly reduce the average holding period, capital inflows into France, and the flexibility of many investors. Therefore, the vision of finance in France is rather naturally skeptical, especially when it comes to new assets. Thus, the Nouveau Front Populaire sees cryptocurrencies as “speculative tools to be strictly regulated.”</p> 
<h2 id="h-the-debate-around-solidarity-finance">The debate around “solidarity finance”</h2> 
<p>Solidarity finance is a form of financing aimed at supporting projects with “social or environmental utility.” The expansion of these considerations, particularly through ESG, has given rise to a multitude of funds and criteria. But this concept takes on particular importance in the current context in France, marked by growing political and social tensions.</p> 
<p>In finance, sustainable funds generally show lower returns than other funds but benefit from a better image. While it is clear that the development of “solidarity finance” influences the organization and strategy of companies, political support is not as clear. Moreover, it remains difficult for many medium-sized companies to meet the demands of increasingly standardized finance.</p> 
<h3 id="key-figures">Key figures</h3> 
<p>In 2022, the amount of solidarity savings reached €24.5 billion, marking a 20% increase compared to the previous year. Although this amount is still marginal compared to the overall savings in France, it demonstrates a growing interest among savers for responsible and ethical investments.</p> 
<p>Solidarity savings products, such as the Sustainable and Solidarity Development Booklet (LDDS) and sharing funds, have raised approximately €600 million in funding. Additionally, the government has strengthened advantageous tax measures, such as income tax reductions for subscriptions to the capital of solidarity enterprises (SOFICA) and benefits related to the SME-ETI Equity Savings Plan (PEA).</p> 
<h3 id="limits-and-challenges">Limits and Challenges</h3> 
<p>Despite these advances, solidarity finance in France faces several obstacles. First, the awareness of these products remains limited. A Finansol study shows that only 20% of French people are aware of the existence of solidarity finance. This lack of visibility hinders broader engagement of savers.</p>
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<p>Furthermore, the profitability of solidarity finance products is often lower than that of traditional financial products, which can deter some investors. The projects funded, although meaningful, are often perceived as riskier. This limits the appeal to large institutional investors. Finally, regulatory oversight and transparency requirements sometimes represent an obstacle for small structures.</p> 
<h2 id="the-path-towards-financial-centralization-is-inevitable">The path towards financial centralization is inevitable?</h2> 
<p>For over a century, we have observed a trend towards the centralization of the banking system in the United States and Europe. Since 1990 in France, the number of banks has dropped from over 1,800 to 769 in 2021 (-58%!). This phenomenon is mainly linked to regulatory and normative inflation, but it is also related to extraordinarily low rates after 2010. The concentration of the financial system around major national or global players favors: the rise of a few standardized products, higher fees, increased systemic risks, and a risk of political collusion.</p> 
<p>However, the extreme centralization of finance seems to have been disrupted by certain innovations. In particular, the arrival of blockchain seems to challenge the way finance is practiced.</p> 
<h2 id="a-community-and-decentralized-vision-the-contribution-of-cryptocurrencies">A community and decentralized vision: the contribution of cryptocurrencies</h2> 
<p>Bitcoin and other cryptocurrencies offer an alternative to traditional financial systems. Indeed, their decentralized nature allows for greater transparency and reduced dependence on centralized financial institutions. This regulatory and practical shift between the old world and the new questions the sustainability of traditional finance. In fact, more and more managers, banks, or funds favor the development of blockchain as a support for long-term financial assets.</p> 
<p>In general, the blockchain allows the evolution of finance in the following areas:</p> 
<ul> 
 <li><strong>Transparency and traceability</strong>. Blockchain allows tracking every euro invested in a project. This ensures that the funds are used in accordance with the stated objectives. Moreover, it enhances the trust of donors and investors.</li> 
 <li><strong>Reduction of transaction fees</strong>. By eliminating intermediaries, blockchain generally reduces transaction fees. This allows more funds to be channeled directly to projects.</li> 
 <li><strong>Speed</strong>. Blockchain transactions are executed in real-time. This accelerates the financing of projects and the implementation of initiatives.</li> 
 <li><strong>Democratization</strong>. Blockchain facilitates access to financial services for unbanked populations by offering decentralized microcredit and payment solutions.</li> 
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<p>However, some point out the high energy consumption of Bitcoin. There are still many economical blockchains that meet the needs of tomorrow’s finance.</p> 
<h2 id="conclusion">Conclusion</h2> 
<p>Solidarity finance in France represents an innovative and necessary response to sustainable challenges. In France, the regulation and oversight of finance seem particularly well-developed. The financial transaction tax reflects this relatively common conception of finance. At the same time, the increase in standards and regulations has led to the development of solidarity finance. Public authorities have implemented incentive measures and advantageous tax devices.</p> 
<p>Nevertheless, this new approach to finance presents certain limits. Despite experiencing growth, the spread of solidarity finance is still moderate. The associated returns are often lower, and the procedural demands for companies are greater. Moreover, finance faces a growing centralization problem. In Europe and the United States, the concentration of the banking sector results in less competition, which can affect consumers.</p> 
<p>In this context, finance needs to regain some flexibility to face tomorrow’s challenges. Blockchain, in particular, plays a crucial role in the modernization of solidarity finance. It offers total transparency of transactions, a significant reduction in transaction fees, and increased efficiency. This technology revolutionizes the way solidarity funds are managed and distributed. It also allows unbanked populations to be included in the financial system, thanks to decentralized microcredit and payment solutions. However, blockchain still presents some limits to be widely applied and used by traditional finance.</p>

Can Finance Meet the Expectations of the French People?

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