PARIS (Reuters) – The French state should gradually reduce financial support to the economy over the coming year as coronavirus safety measures are lifted, Bank of France Governor Francois Villeroy de Galhau said in an interview with French daily Les Echos.
“It will have to be done without rush, but without fear as well”, Villeroy said.
Villeroy told Les Echos that there was no risk of overheating in the European economy.
“Long-term interest rates (in the United States) seem to be rising as a consequence of the announcement of the Biden administration’s $1,900 billion economic recovery plan. Talking about overheating and a sustained rebound of inflation in the U.S. seems premature at the least; and there is no risk of this kind in Europe,” he said.
Villeroy, who is also a European Central Bank policymaker, said Europe should boost the euro’s international role as its use in global foreign exchange reserves amounted to only a third of that of the dollar, while the U.S. and European economies are of similar size.
Villeroy reiterated earlier this month that the French economy was still on track to rebound 5% this year after the euro zone’s second-biggest economy suffered its deepest post-war recession last year due to the coronavirus outbreak and measures to contain it, including two national lockdowns.
France’s gross domestic product contracted by 8.3% in 2020.
(Reporting by Matthieu Protard and Geert De Clercq; editing by Jonathan Oatis)