The French paradox: record cash levels, record inaction to put that money to work

France is experiencing a remarkable paradox: companies have never held as much cash as they do today, yet never have they done so little with it.
According to the Banque de France, non-financial corporations now hold more than €600 billion in deposits. An all-time high.

However, most of this liquidity sits in non-yielding or ultra-low-yield bank accounts, generating almost no return while inflation remains above 2 %.

This combination of record cash + record inaction is quietly eroding corporate financial strength.

Why is corporate cash piling up?

1. Uncertainty and economic volatility

Political gridlock, inflation, and slower growth have led businesses to build up liquidity buffers “just in case.”

2. Legacy banking habits

Many French SMEs rely on traditional checking accounts that pay close to 0 %, even as ECB rates sit at 2 %.

3. Lack of accessible treasury tools

Advanced treasury solutions were historically reserved for large corporates. SMEs, lacking tools and financial teams, default to doing nothing.

4. Misconception that “cash = safety”

In reality, idle cash is not safe. It is losing value every day.

The cost of doing nothing

With inflation around 2.5 %, the value of cash erodes continuously.
A company holding €5 million in a non-remunerated account loses:

→ €125,000 per year in real purchasing power
→ or €10,400 per month
→ without noticing it

This erosion is invisible, silent, and devastating over time:

• lower investment capacity
• weakened margins
• reduced competitiveness

Inaction itself becomes a strategic risk.

Why banks don’t help

Even with ECB rates at 2 %, banks rarely pass these benefits to businesses.
The spread between central bank rates and SME deposit rates is captured as profit margin by banks.

This means the financial system is designed for companies not to earn yield on their own liquidity.

To break the paradox, companies must turn to market-based solutions.

A modern solution: liquidity + performance

Smart Overnight – the liquidity engine

• Tracks euro money-market rates
• Linked to the ECB deposit facility
• Offers daily liquidity and daily interest accrual
• Low-risk, transparent, and efficient

Perfect for operational cash and safety buffers.

Amundi High Yield ESG – the performance engine

• ESG-screened European high-yield corporate bonds
• Benefits when interest rates decline
• Adds strategic yield for medium-term reserves (6–18 months)

Together, they form a balanced, resilient treasury strategy:
stable liquidity + enhanced returns.

Why Velesios unlocks action

Most companies do nothing with their cash because acting has always been complicated.
Velesios solves this problem:

• Corporate account opening directly on our platform
• Execution and custody handled by Interactive Brokers
• Lower fees thanks to aggregated orders
• Transparent, simple, intuitive dashboard
• Designed for SMEs and individuals, not just large institutions

In short: we turn financial inertia into financial efficiency.

Conclusion

The French paradox exists because companies were not given the tools to act.
With modern, market-based instruments and digital platforms like Velesios, the era of record cash without strategy is over.

In 2025 and beyond, the competitive advantage will belong to those who activate their liquidity, not those who let it sleep.

FAQ: corporate cash in France

Why are French companies keeping so much cash?
Uncertainty, conservative habits, and lack of accessible treasury solutions.

Is idle cash really a risk?
Yes inflation ensures a guaranteed loss of value.

Are ETFs suitable for corporate treasury?
Money-market and ESG corporate bond ETFs are widely used in Europe for treasury optimisation.

Is it complex for SMEs?
With Velesios, onboarding and investing are fully digital and simple.

Sources & references

• Banque de France — Deposits of non-financial corporations (SNF)
  
• Banque de France — Financial situation of non-financial corporations
  
• Service-Public — Livret A rate (1.7% from August 2025)
  
• Ministry of Economy — Regulated savings update (Livret A & LEP)
  
• European Central Bank — Monetary policy decision (5 June 2025)
  
• ECB — Key interest rate overview
  
• Amundi EUR High Yield Corporate Bond ESG UCITS ETF (LU2346257210)