Jean-Jacques Pluchart* Since the accession of Donald Trump to the presidency of the United States, economic patriotism has invited itself into the current debates animating all nation-states. These exchanges reveal not only the polemical nature but also the polysemous nature of the term economic patriotism, often equated with that of economic nationalism.  It is true that these notions have been embraced by sometimes opposing schools of thought, and that they still lack a solid scientific foundation. Their perceptions differ according to the political opinions and states of mind of different social groups. Economic patriotism is distinguished from economic nationalism by its nature: the former reflects a rather defensive sentiment (attachment to a country and defense of its economic equilibrium), while the latter covers an offensive ideology (the quest for the economic supremacy of a nation-state). The former enjoys a generally positive image, while the latter suffers from rather negative prejudices, notably inherited from the history of the 20th century. Economic patriotism is therefore a less confrontational concept than economic nationalism.  The current resurgence of economic patriotism is mainly driven by the need to rebalance trade balances and alleviate the foreign debts of certain countries, such as the United States and France. In some countries, such as France and Italy, it is justified  by the need to reduce unemployment by promoting local production, and to combat inequalities of income and wealth between citizens. It is also explained by consumers’ growing expectations in terms of respect for human rights, public health and environmental protection, which justify their demands for worker protection and product traceability. In Europe, demonstrations in favor of a return to protectionism, deglobalization of trade, relocation of factories, deconsumerism, etc., have been relaunched since the 2000s and relayed by official declarations and reports (notably the Draghi and Carayon reports). On the ideological front, polemics about economic patriotism pit defenders against opponents of free trade, and federalists against sovereignists. Economic patriotism is denounced by the former as provoking “trade wars”, and by the latter as engendering unfair globalization of trade. Some see it as an alternative to the cosmopolitanization of societies and the globalization of economies – which generate unemployment and inequalities in Western countries – while others see it as a factor in the contraction of trade and the slowing of growth of societies and the globalization of economies – generating unemployment and inequalities in Western countries – but represented by others as a factor in the contraction of trade and the slowdown of growth. These debates have been rekindled by the contestation of the latest international trade agreements (such as CETA and TAFTA) and the one-upmanship (the tit for tat theorized by Axelrod) between states, illustrated in particular by the threat to raise US tariffs on Chinese imports, countered by the devaluation of the Chinese yuan. The paradoxes observed in current discourses on trade help to shed light on the nature of contemporary economic patriotism and explain its revival. It responds to the main forces transforming international trade: globalization and the integration of production chains, financialization and the digitization of transactions. It meets the founding criteria – political, social and cultural – of patriotism. It mobilizes all the stakeholders in each nation-state, and concerns its material, immaterial and financial resources.  It calls on an ever-expanding arsenal of customs, tax and regulatory practices and instruments, borrowing from hard, soft and rough laws, traditional negotiation methods and social networks. It embraces both state and spontaneous patriotisms, and is a source of great satisfaction to our customers.  It draws on an ever-expanding arsenal of customs, tax and regulatory practices and instruments, borrowing from hard, soft and rough laws, traditional negotiation methods and social networks. It encompasses patriotisms that are both state-sponsored and spontaneous, defensive and offensive, flexible and variable-geometry. It requires an appropriation of the territory that combines a global approach with local roots for economic exchanges. It is part of a process of “glocalization” of exchanges, exploiting both global and local resources. It strives to reconcile local, national and universal solidarity. The emergence of new forms of economic patriotism relies on States guaranteeing national sovereignty, citizens respectful of universal values, companies concerned with correcting the negative externalities of their activities, and consumers aware of the effects of their purchasing behavior. Respecting these conditions should help preserve the socio-economic equilibrium of nation-states and the social, societal and environmental of XXI th century. *inspired by J-J. Pluchart,  « Les nouvelles formes du patriotisme économique », chapitre in C. de Boissieu et D. Chesneau (dir.), Le patriotisme économique a-t-il un sens aujourd’hui ?, Eds Maxima, novembre 2020. 

Clearly distinguish the public deficit from the debt The public deficit results from an imbalance in the day-to-day management of the State budget. The latter spends beyond the resources at its disposal. However, these resources are essentially made up of taxes levied on household and business income. These resources are certainly voted by the national representation and socially accepted, but they depend on a legal constraint and would suppose at least, the exercise of a rigorous management at least equivalent to the power of coercion from which they originate. Also the creation of a permanent public deficit reflecting the excess of expenditure over current revenues constitutes in fact the establishment of a right of withdrawal on the future income of citizens without their consent. In this sense, beyond the principle of accounting balance, the public deficit poses a democratic problem. The current presentation of the State budget does not allow for a clear and comprehensive distinction between operating and investment accounts and does not link investment revenues to any prior constitution of savings to cover at least the annual depreciation of borrowed capital. And it would be necessary for the State to apply to itself these rules of balance and savings, scrupulously observed by local and territorial communities. This does not prevent the latter, despite the increasing financial constraints imposed by the State, from maintaining local public services as best they can and representing more than 70% of public investment. Apart from the possible lags related to the uncertainty of the annual forecast of revenues and expenditures, the operating budget deficit should only be marginal and cyclical… The issuance of treasury bills serving as a cash instrument. The legitimate question that the State budget deficit must raise, particularly in France, must not distort the issue of public debt. Under no circumstances can the budget deficit be considered as the cause or explanation of public debt. Public debt is not a constraint resulting from poor budget management but remains primarily an economic tool. The merits of public debt Indebtedness consists of mobilizing funds, beyond one’s immediate capacity, to finance useful investments when it comes to states and households or profitable ones when it comes to businesses. This mobilization of funds, made available, presupposes the existence and agreement of lenders who have savings to invest in the more or less long term and implies in return the repayment of the advanced funds plus interest, according to a negotiated schedule. The use of debt by States therefore corresponds to that economic moment when the savings of agents in excess of resources are transformed into collectively useful investments. For example, a hot topic of the day, European states will borrow to invest individually and collectively in strengthening their defense, that is, in the security of their citizens. It should be noted that the same approach could be used to invest in the ecological transition of the European economy. In any case, these investments, made possible by the mobilization of the loan, will contribute to the revival of the economic sectors concerned and to the emergence of new activities. They will create wealth and in return allow new tax revenues. As we can see, the indebtedness of States and the benefits of the investments they generate can only be assessed over time. The relevance of public borrowing will be seen in return by the progressive increase of a service and wealth, like private investments made by companies that measure the profitable effects in the long term. The question of assessing public debt Public debt is commonly evaluated as a percentage of GDP. Note that this compares a stock: the outstanding debt; with a flow: the economic value created during the year. This is statistically questionable. What’s more, the establishment of this relationship constitutes economic nonsense. How can borrowing be useful if it has to be paid off in full in a single year of national wealth creation? As we have just pointed out, the reason a government takes on debt is to increase its capacity to finance investments whose effects can only be seen over time. It’s also worth noting that the level of debt measured in this erroneous way has never undermined the economic capacity of states: England, the leading economic power in the 19th century, had a level of outstanding debt equivalent to 170% of its GDP; the United States will be at 120% of GDP in 2024; China, according to its official figures, is close to 126% of GDP, and France 113%…. The enigmatic rule urging European countries to limit their debt to 60% of GDP has no economic justification whatsoever, other than to restrict their investment capacity at a time when raising funds through borrowing is becoming essential. The economic measure of a country’s debt burden should be calculated over a number of years, on the basis of its capacity to pay off its debts in terms of The economic measure of a country’s debt burden should be calculated in terms of the number of years it will be able to pay off its debt in relation to the renewal of its GDP. This measure is obtained by dividing two flows, statistically comparable quantities: GDP by the annual amount of capital amortization plus current interest. Thus, if France were to roll over its 2024 GDP, it would take around 5 years to pay down its debt in principal and interest, which is less than the average duration of its indebtedness. The duration of public debt It’s not uncommon to deplore the fact that public debt is a burden for future generations. But this is to misunderstand the average duration of public debt, which is 6 to 8 years. This means that one and the same generation will experience around ten renewals of government debt, which leaves plenty of time to reduce the debt burden, if necessary, and to place the burden on the same generation. The debt renewal technique of replacing matured loans with new ones, using financial hedging techniques,

The European Union, in a clear desire for energy transition and industrial sovereignty, is deploying the Net-Zero Industry Act (NZIA), an ambitious initiative adopted in June 2024 as part of the Green Deal Industrial Plan. This text aims to strengthen the production of clean technologies in Europe, while responding to the American dynamics of the Inflation Reduction Act (IRA). The objectives of the NZIA are clear: to meet 40% of European needs in clean technologies by 2030 and to represent 15% of global production by 2040. Priorities include key sectors such as hydrogen, solar photovoltaics and carbon capture technologies. This initiative is part of an industrial competitiveness strategy, while accelerating the energy transition and reducing carbon emissions. To facilitate this transformation, the NZIA introduces a simplified procedure for the approval of industrial projects related to Net-Zero technologies. The timeframes are considerably reduced: 12 months for projects under 1 GW and 18 months for those exceeding this capacity. An ambitious national strategy: the French solar pact France, for its part, is actively investing in the development of its solar capacities. Between 2020 and 2024, solar installations increased from 2 GW to 3.3 GW, but the country is still far from the government’s target of 6 GW per year. To achieve this target, the solar pact provides for a stronger mobilization of public and private resources. As early as 2025, ESG (Environment, Social, Governance) criteria will be introduced in public procurement, with an incentive bonus for projects using solar panels manufactured in Europe. A strategic tax credit launched in March 2024 is expected to generate €23 billion in direct investment and create 40,000 jobs in the French photovoltaic sector. Greening public procurement From 2025, public contracts exceeding €25 million will have to meet strict requirements: no product originating from more than 50% of third countries will be able to be integrated. This measure aims to reduce dependence on foreign imports, while stimulating local production. However, the current low European production capacity could pose challenges. Strengthening the competitiveness of local manufacturers and accelerating industrial production of solar panels will be priorities to avoid a supply disruption. Financial challenges Although the NZIA encourages private investment and mobilizes existing public funds, project financing remains a major challenge. Current European resources, such as the Horizon Europe program or the Just Transition Mechanism, appear insufficient compared to the massive amounts invested by the United States via the IRA. However, a possible dismantling of the IRA under a new US administration could open a window of opportunity for Europe, allowing it to strengthen its capacities in a redefined international context. Building energy sovereignty European actors in the solar industry are organizing themselves to meet these challenges. Their commitments include the promotion of a solar panel performance index called InduScore, the signing of long-term contracts to secure the supply and deployment of at least 30% InduScore certified panels by 2025. However, China’s dominance of the global photovoltaic market remains a major obstacle. China’s industrial capacity, which far exceeds European needs, continues to pose a significant challenge to European energy sovereignty. Conclusion: Ambitions to be realized The Net-Zero Industry Act and the French Solar Pact are key levers to enable Europe to meet its climate and energy targets. However, several challenges remain to be overcome: securing sustainable financing, reducing dependence on imports and accelerating local production. The success of these initiatives will require close coordination between European institutions, national governments and private actors. In France, the Solar Pact offers a unique opportunity to position the country as a European leader in solar energy. To achieve this, these challenges will have to be met with an ambitious vision, a stable regulatory framework and adequate financial resources. Chronicle by Benoit Frayer

On April 26, 1956, Malcolm McLuhan, a service station manager, loaded the first commercial container in the port of Newark. This container revolutionized the transport of goods by interoperable routes, whether by sea and river, air, rail and road. This basic building block of industrial logistics has made it possible to build a supply chain that has been deployed on a global scale. This system has caused a real “creative destruction” in the various logistics trades (dockers, crane operators, carriers, traders, etc.), but also in shipbuilding, aeronautics and the automotive industry, as well as in civil engineering (roads, quays and docks). This vast redeployment was driven by the search for economies of scale, productivity gains, standardisation of transported products, a drastic reduction in transport costs and better security of exchanges. These advances, combined with lower customs duties, have made it possible to globalise and intensify trade between continents, countries and regions. Container flows have fluctuated in line with economic growth rates and free trade agreements. They have prospered despite criticism denouncing job losses, shipwrecks and road accidents, as well as water and air pollution. This universal logistics network was partially disconnected during the Covid period and it risks being redeployed and partially disabled by the slowdown in trade that will result from the increase in customs duties decided by the new US presidency.  This return to protectionism will probably reactivate industrial projects and social movements in favor of local transport modes, the revival of river navigation, multimodal rail-road transport, bulk distribution, the relocation of production and the organization of production on a just-in-time and zero-stock basis, and in general, the shortening of the supply chain… The logistics of tomorrow are conditioned by the results of the (perhaps ephemeral) American experiment of “deglobalization” of world trade, but the current logistics infrastructures, based on the container ecosystem, should persist by adapting to the specific needs and constraints of transport and storage of industrial and commercial activities. The question is therefore perhaps less to think about the logistics that “we want for tomorrow”, than about the logistics that are still “possible for tomorrow”. Note by Jean-Jacques Pluchart

Column by Jean-Jacques Pluchart After 40 years of de-industrialization, the subject of “reindustrialization” has been making a comeback in public discourse, since 2009. Several initiatives have been taken by successive governments: the States General of Industry, the Gallois report on industrial competitiveness, France Relance, France 2030. The Lluansi Report  In November 2023, the Ministry of Economy commissioned Olivier Lluansi, former interministerial delegate for Industrial Territories, to carry out a mission on the re-industrialization of France by 2035. His conclusions have not ultimately be made public, but they have been presented in a book analyzed by the Turgot Club (see clubturgot.com).  The report reveals that France is one of the most de-industrialized countries in Europe and ranks among the lowest one in the European Union, ahead of Greece.  The 10% share of GDP covered by industry has stagnated at 10% since 2009 and can only reach 12-13% by 2035. France would ensure at least a balanced trade balance on manufactured goods. To stem the €60 billion annual deficit, he advocates the creation of 60,000 industrial jobs per year, three times the 20,000 industrial jobs created per year in recent years. He notes that “50% of people trained in industrial trades will do something else”. According to the report, the industrial recovery presupposes a patriotic leap and a more massive recourse to public order. The “Made in France” is an under-exploited lever; it could bring in €15 billion more per year, or 25% of the trade deficit in manufactured goods. The report also recommends not to concentrate resources on breakthrough innovations and gigafactories, which represent only 20 to 30% of the re-industrialization potential, when SMEs and mid-caps make up two-thirds. This industrial fabric in the heart of medium-sized cities needs public support to regenerate. Re-industrialization also implies to reduc the depenedence of French supply chains and freeing up land, while remaining Climate Law compliant, which sets a target of zero net artificialization by 2050. The White paper “Everyone can make French industry shine”  The Les Influstriels collective, which aims to promote the attractiveness of the French industry, published a White paper in December 2024 entitled “Everyone can make French industry shine”. It reveals that “83% of French people have considered it to be in decline for several years”. The authors question why the industry suffers from such a negative image. They note that France has many startups and SMEs engaged in new technologies and sustainable economies – including decarbonization – but that they lack public and private funding. However, since the green industry law, the French can participate in the ecological transition and rei-ndustrialization in various ways: life insurance, a Pension scheme (PER), private equity funds… In September 2024, Bpifrance launched the BE3 private equity fund, the 4th product of its retail range, accessible to the French from €500. In 2024, the government also launched the “turnkey sites-France 2030” system, selecting 55 industrial sites from around a hundred applicants. This system allows project leaders to access land in the short term, and allows developers and local authorities to enhance the value of the labelled sites. According to the Minister of Ecological Transition and Territorial Cohesion, the number of applications received from local authorities, private companies and various organizations, reflect an  advance in reindustrialization.  “France 2030 turnkey” sites have been created to accelerate the installation of factories. These sites will be decontaminated, equiped with access roads, connected to utility networks and will benefit from accelerated administrative procedures. With this concept, the government wants in particular to reduce the duration of industrial installations from 17 months on average to 9 months. The sites were chosen according to 5 criteria: economic attractiveness – location, accessibility, transport axes, employment area, differentiating ecosystem; limited environmental impact – land sobriety and rehabilitation of brownfield sites; site maturity – potential by 2030; relevance of the project to be integrated into the territory; land control of the site.  The France Foncier+ portal already lists more than 600 sites available or in the process of being made available. The redevelopment of brownfield sites has become one of the priorities and land recycling appears to be a key measure, which falls within the context of the law on green industry. The 55 sites are spread over the entire territory, but if all the regions are represented, there are 1 to 8 sites per region, the best endowed being the PACA region, with 8 sites, followed by Normandy (7); Occitania and Île-de-France (6 each). The size of the chosen sites is very variable, since there are projects of 3 ha as well as 340 ha, the challenge being to give oneself the “means to attract all projects, from the industrial SME to the gigafactory.” [1]  Olivier Lluansi, “Réindustrialiser, le défi d’une génération”, éditions La Déviation, 2024.

Column by Sophie Friot Literature and studies on energy and ecological transitions regularly address Kaya’s identity, analyzing the human impact on the climate and understanding the link between changes in gross domestic product and carbon evolution. It would be too simple to correlate gross domestic product (GDP) increase with carbon growth, suggesting that the solution to rising greenhouse gases would simply be « de-growth ». This equation is a “tool” used in many research projects to better identify the levers to move towards an economically sustainable and less carbon-intensive world. It is used by the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency, among others, to analyze changes in CO2 emissions from fossil fuels. This concept refers to the Japanese economist Yoichi KAYA, who specializes in energy and the environment, and wrote in 1993 his book :  “Environment, Energy, and Economy: Strategies for Sustainability”. More than 30 years ago, it demonstrated that the increase in energy consumption associated with economic development can vary by population level, energy sources, and regions (Western versus developing countries). It is defined as follows: The energy intensity component of gross domestic product is the amount of energy required to achieve a result or a production. In Western countries, the energy intensity of the economy has followed a downward trend since the beginning of the industrial era. The sharp decline was caused after the two oil shocks by the development of nuclear energy and renewable energies. Notably, the decrease in energy consumption being smaller than the temporary drop in gross domestic product resulted in the anomaly of the 2020 health crisis period when energy intensity rebounded upwards. Another component of the equation, closely related to the previous one, is the carbon intensity, as the share of CO2 in total energy consumption. Carbon intensity has followed the same trend since the early 20th century with the increasing weight of oil and gas in the mix, which emit less CO2 than coal ; the movement has accelerated since the 1980s with the rise of nuclear and renewables, such as wind or photovoltaics. Following the effects of the 2 oil shocks of the 1970s, developments in gross domestic product and energy consumption needed to be separated. In this case, we are talking about: –        Partial decoupling when emissions grow less rapidly than gross domestic product –        Absolute decoupling is when emissions decrease while gross domestic product increases, which means green growth. With Trump making shale oil and gas a priority and China still relying on coal for the majority of its energy production, there is still scope to achieve full and global decoupling to meet Net Zero Emissions targets by 2050. In conclusion, let us remain optimistic because, without total decoupling, partial decoupling is possible by levers such as: –        Improvement of technologies in construction –        Energy renovation of buildings –        Electrification of transport –        Progress towards a less carbon-intensive energy mix: development of renewable  energies and reduction in the use of coal in fossil fuels. In Germany, the closure of the remaining nuclear power plants has not curbed the decline of fossil fuels, such as lignite, in the face of the development of renewable energies.

Jean-Jacques Pluchart The new European CSRD directive, published on December 16, 2022, constitutes a significant step forward in the practices of managers – in particular CFOs and CSR managers -, but also in the professions of accountancy and law. The CSRD directive will gradually impose “sustainability reporting” on all companies (excluding micro-enterprises) according to a staggered timetable from the reference years 2024 to 2028. The data published by the companies will have to be audited and certified by independent third parties (the PSAIs) including specialized compliance control firms, lawyers and auditors specially trained in the various disciplines (technical, legal, accounting) mobilized by CSR and sustainable development. These auditors, supervised by the French Audit Office (H3C), renamed the French Audit Authority (H2A), may be assisted by Chat GPT-type applications, informing them of the rules, standards or markers applicable or observable in the main sectors of activity. A few months later, on June 26, 2023, the ISSB, created in 2021 at COP 26, published two initial climate standards (IFRS S1 and IFRS S2) applicable internationally. The two repositories have notable differences. The sustainability reports published by European companies will display indicators divided into 4 types of ESG standards (cross-cutting, environmental, social and governance) and 13 sustainability standards (ESRS).  While the European Union had aligned itself with the Anglo-Saxon financial accounting standards (IFRS), the European extra-financial framework (CSRD) differs from the American (RCRD) and international (ISSB) frameworks.  The Commission recommends the application of dual materiality, both financial and material, of the “impacts, risks and opportunities” resulting from the activities of companies, while the Anglo-Saxon standards are limited to financial issues.  The European approach has multiple implications: How to anticipate and measure the risks incurred by the company and its ecosystem? How to identify and classify the internal and external stakeholders included in the value creation chains of companies? How can we map the interactions between the company and its various stakeholders? How to detect and weigh their impacts, risks and opportunities?   How can they present their strategies and business models concisely without revealing certain projects or business secrets? How to define the roles and responsibilities of the various governance and management bodies involved in achieving the 17 Sustainable Development Goals (SDGs) set by the Paris agreements in 2015? How can we ensure the traceability of the sources and the validity of the measures of the global and specific impacts, positive and negative, induced in the short, medium and long term by the activities of companies and their stakeholders, within the perimeters of their ecosystems? What metric should be adopted to make the indicators robust and comparable? How can the report be made understandable by the multiple actors and observers of the companies’ activities? How can indicators be made comparable between companies in the same sector and/or territory? How can all the indicators within the same group be weighted, aggregated and consolidated? The drafting of sustainability reports in accordance with the CSRD, which will replace the DPEF, raises issues that require the mobilization of managers, accountants, financiers, academics and experts from various disciplines, whose coordination falls under Impact, Risk and Opportunities (IRO) Management. This new mode of strategic and operational management of the company is still in its learning phase, because its concepts and models are not all stabilized and its implementation is the subject of debate in professional and scientific circles. Analyses of the NFPRs of French companies carried out in particular by the Autorité des Marchés Financiers (AMF) and by extra-financial rating agencies show that company data is not always sufficiently traced, monitored over time, and comparable within the same sector of activity. Last but not least, the application of the new CSRD standards should make public the strategic thinking process that was previously the domain of shareholders and company managers. This transparency should lead to the limitation of green and social washing and the revision of certain founding paradigms of management.

Jean-Jacques Pluchart France has become the European leader in AI. France Digitale’s 2025 AI mapping, carried out with Sopra Steria Ventures and the H7 accelerator, lists 751 startups as of January 1, 2025, an increase of 27% compared to March 2023. It “exclusively lists start ups created since 2004, whose head office is based in France, employing at least 2 people and which develop at least one product that is based on, integrates or serves the development of artificial intelligence technologies”. The French ecosystem has raised €13 billion and created 36,000 jobs since March 2023, and 92% of them intend to recruit in 2025, which could represent 3,500 additional jobs. Île-de-France remains the main innovation hub, with 63% of start ups, followed by Occitanie (6.5%) and Auvergne-Rhône-Alpes (6.1%). However, the mapping reveals that there are still many challenges to be met in terms of financing, recruitment, computing power and market conquest (especially public). Startups are using an increasingly wide range of technologies: 43% of startups are developing generative AI, 47% are developing solutions based on machine learning, deep learning, computer vision or symbolic AI.  The application sectors are increasingly diversified, and the main ones are health and biotechnology (13%), software development (9%), data and cloud (8%). © France Digitale. Répartition des start-ups par secteur The mapping also reveals that 32% of French AI start ups are already profitable, and 54% of them expecting to be profitable within three years. These performances are explained by the relevance of their business models: 27% offer “off-the-shelf solutions”, 22% offer customizable solutions, 37% support their customers in deployment, 13% co-develop their products with their customers. Their main customers are large companies (34%) and mid-caps (20%). 60% of start ups already generate part of their revenues internationally. Two-thirds of start-ups have obtained class A funding, and 24 of them have raised more than €100 million, 2.5 times more than in 2023. Access to data remains a major obstacle for 25% of startups, who would like to see the creation of a European regulation of data access. Computing power (11%) and recruitment (13%) are also cited as challenges. Energy consumption is also a problem, although France has several data centers. According to Maya Noël, director of France Digitale, competition with the United States requires a collective approach: “France is the European hub for AI startups in Europe. However, this national scale is not realistic for anyone: faced with the increased competitiveness of the United States, Europe must now constitute a united ecosystem that offers turnkey solutions to support the deployment of AI in companies and in public administrations”.

Donald Trump, who has been in power for several weeks, is well on his way to pursuing deregulation of the financial sector. With the European banking sector already losing ground to US banks, the gap is likely to widen as the EU implements Basel 4 standards in 2025. These standards were published by the Basel Committee in December 2017 and transposed at European level through the Capital Requirement Regulations 3 (CRR3) and the Capital Requirements Directive 6 (CRD6). CRR3 poses serious constraints for European banks by increasing capital requirements and risk-weighted assets. Through this standard, the Basel Committee also aims for international harmonization among banks. European banks, which are fond of internal models that consume less equity, will replace them with standard models used by their American counterparts. Among the constraints of the new credit risk regulation is the notion of “Output Floor”. This aims to reduce excessive variability in institutions’ own funds requirements calculated using internal models. It should improve the comparability of institutions’ capital ratios, restore the credibility of internal models and ensure a level playing field between institutions. In practice, the weighted assets calculated by banks on the basis of their internal models may not, in total, be less than 72,5% of the weighted assets calculated using standard approaches. Thus, the benefit a bank can derive from using its own models is limited to 27.5% of the weighted assets calculated using standard approaches. The Directive will be implemented on a transitional basis until 2030 to avoid sudden increases in capital requirements associated with certain asset classes. Another novelty in CRR3 is the consideration of the crypto-asset market. The European Union had already taken the matter into its own hands with the introduction of a uniform legal framework in the form of the MiCA (Markets in Crypto-Assets) regulation adopted in May 2023. After several years of rapid growth in crypto-asset markets driven by a growing number of investors, CRR3 has decided to integrate crypto-assets into the banking prudential framework. Since Donald Trump’s election, the price of bitcoin has soared. The 47th president of the United States recently indicated his intention to establish a strategic Federal Reserve of Bitcoin. He sees it as a way to strengthen the U.S. economy in the face of growing competition from China. Financial institutions are thus exposed to increasing risks that can affect financial stability: mainly credit risk, but also counterparty, market and liquidity risk. The standards therefore aim to regulate and limit the risks associated with these exposures. The European Union, as always in good shape, is therefore continuing to implement the banking package. CRR3 has even planned an assessment of the overall situation of the banking system in the EU by 31/12/2028. Meanwhile, our neighbors are charting their way down less regulated paths…In the UK, the entire Basel III reform has been postponed until 2026. In the United States, plans were put on hold following the resignation in early January of Michael Barr, Vice Chairman of the US Federal Reserve Board responsible for banking supervision. Donald Trump now has a free hand to choose a successor closer to his ideas. Column by Sophie Friot

Between innovation and regulation, what choices for Europe? Conferences-debates organized by the Debouzy firm, February 12, 2025. In the aftermath of the “AI Action” summit organized in Paris and the “open house” day at Station F, as well as the publication of the Draghi and Letta reports and the European Commission’s “Competitiveness Compass” plan, but above all, the election of Donald Trump and the ongoing geopolitical and technological upheavals, what will be Europe’s place in the new balance of power? Can it impose its rules as a global reference? Does the regulation advocated during the European Commission’s previous mandate – particularly in terms of personal data protection (GDPR) – have any chance of being implemented in AI? Marc Mossé (environmental advisor at Debouzy) recalled the challenges of the Paris summit, which brought together heads of state and leaders of major tech companies. He noted that for the past 15 years, AI has no longer been a matter of regulating a “common good”, but has become a “lever of power” for a State in the confrontation between geopolitical blocs. He noted that since the emergence of generative AI in 2022, the financial stakes have increased tenfold, with the US raising more than $500 billion, the European Union more than €200 billion and France €109 billion (apparently not included in the European envelope), to finance the development of AI.  Pierre Sellal (French Ambassador) stated that the Paris Summit had made it possible to better measure the impacts of AI in certain sectors such as defense, health or energy, but that paradoxically, the effects of AI on employment and education, as well as the ethical questions posed by certain applications of AI, had not been sufficiently debated. He noted that major differences had emerged between the American and European approaches to AI regulation.  Two major countries – the United States and the United Kingdom – refused to sign the final declaration of the summit. Florence G. Sell (professor at Stanford) observed a widening of the cultural divide between American and European (especially French) jurists, the former being in favor of a soft law based on AI “governance” and a flexible framework of the AI value chain, and the latter being more attached to a hard law based on ethical principles and regulation of practices. The former are opposed to the “bureaucratization of AI development” (the “Brussels effect”) and the latter are hostile to libertarian practices of crony capitalism in the name of freedom of creation. GAFAM, however, is rather opposed to open source applications, preferring an open source way, which reveals the logic of data processing, but not the source codes themselves and the training databases considered as business secrets. The recent open-source release of the Chinese DeepSeek solution has sparked reactions in the AI ecosystem, with several experts believing that the software was trained on data from the results of GPT chat processing (“distillation”) and that this collective practice could in the future reduce the costs of storing and processing current databases. Mahasti Razavi (partner at Debouzy) assures that the European Union – and France in particular – has many assets in the face of American and Chinese competitors. It has an elite group of AI engineers and several large data storage centers. As of 2024, more than 800 start-ups have been created in France. However, the European market for users of AI solutions remains too small and fragmented compared to the US and Chinese markets. Mahasti Razavi advocates the long-term establishment of a “security framework” based on trust between the multiple stakeholders of AI (combining experts, practitioners, politicians, lawyers and academics) and based on practicable rules of “good governance” applied to a “more frugal AI” than the current general AI. She recognizes that the current AI Act needs to be simplified. The debates that followed the conferences focused in particular on the positive impacts (AI solutions can generate competitive advantages for companies) and negative impacts (AI destroys certain jobs and involves unprecedented retraining efforts, mainly in the service trades). In particular, efforts will have to be made in terms of teaching and learning new professions. Notes by J-J. Pluchart