Bank of France

Central banking before the Bank of France

The Kingdom of France's first experiment with a central bank was the Banque générale (Banque Générale Privée or "General Private Bank"), set up by John Law at the behest of the Duke of Orléans after the death of Louis XIV. It was meant to stimulate France's stagnant economy and pay down its staggering national debt acquired from Louis XIV's wars, including the War of the Spanish Succession. It was nationalized in December 1718 at Law's request and formally renamed the Banque royale a month later. It saw great initial success, increasing industry 60% in two years, but Law's mercantilist policies saw him seek to establish large monopolies, leading to the Mississippi Bubble.

The collapse of the Mississippi Company and the Banque Royale tarnished the word banque ("bank") so much that France abandoned central banking for almost a century, possibly precipitating Louis XVI's economic crisis and the French Revolution. Later successors like la Caisse d'escompte (from 1776 to 1793) and la Caisse d'escompte du commerce (from 1797 to 1803) used the word "caisse" instead, until Napoleon retook the term with la Banque de France ("Bank of France") in 1800.

Bank of France

In 1800, financial power in France was in the hands of about ten to fifteen banking houses whose founders, in most cases, came from Switzerland in the second half of the eighteenth century. These bankers were deeply involved in the agitations leading up to the French Revolution. When the revolutionary violence got out of hand, they orchestrated the rise of Napoleon, whom they regarded as the restorer of order. As a reward for their support, Napoleon, in 1800, gave the bankers a monopoly over French finance by giving them control of the new Bank of France.^[1] Banker Claude Périer drafted the first statutes and Emmanuel Crétet was the first governor. For the first fifteen years it was the sole issuer of bank notes in Paris, and this privilege was extended to other financially important cities and the rest of the country by 1848.^[2]

Timeline

• 1800 Creation of the Bank of France by Napoleon Bonaparte^[1]
• 14 April 1803, the new Bank received its first official charter granting it the exclusive right to issue paper money in Paris for fifteen years.^[3]
• 22 April 1806, a new law replaced the Central Committee with a Governor and two Deputy Governors. All three were appointed by the Emperor.^[3]
• Decree dated 16 January 1808 set out the "Basic Statutes", which were to govern the Bank's operations until 1936.^[3]
• Decree on 6 March 1808 authorized the Bank to purchase the former mansion of the Count of Toulouse in the rue de la Vrillière in Paris for its headquarters.^[3]
• 1808–1936 The Bank's notes became legal tender; expansion of the branch network
• 1936–1945 Nationalisation
• 1973 Rewriting of the Bank's statutes
• 1993 A reform granted the Bank independence, in order to ensure price stability, regardless of domestic politics. This reform cleared the path for the European monetary union.
• 1998 Entered into the European System of Central Banks
• 2003 Christian Noyer becomes governor of the Bank of France
• 2015 François Villeroy de Galhau replaces Christian Noyer. The Bank distributes dividends to the French state of 4.5 billion euros in 2016 and 5.0 billion euros in 2017.

Monetary strategy

The Bank of France contributes to the design of the monetary policy of the euro zone (through macroeconomic research and forecast and by taking part in the deliberations on ECB decisions) and implements it in France.

It is also the guardian of currency: it prints euro bank notes (it is the largest printer of euro notes) and manages the circulation of bank notes and coins. It also participates in the fight against counterfeit money, by training bank employees, merchants, police, etc.

The Bank of France establishes France's balance of payments and manages part of the foreign exchange reserves of the ECB.

Financial steadiness

The Bank of France is responsible for overseeing the French financial sector, through its subsidiary ACPR (Autorité de Contrôle Prudentiel et de Résolution). It assesses risks and weaknesses of the financial system (in 2018, the French financial sector is composed of 777 banks and 827 insurance and mutual insurance companies).

It also monitors payment systems and means, and publishes the Financial Stability Review (Revue de la Stabilité Financière).

Services to the economy

The Bank of France provides services to households, businesses and the French state.

Linkage with the ESCB

ATM of the Bank of France in Paris.

On 1 June 1998, a new institution was created, the European Central Bank (ECB), charged with steering the single monetary policy for the euro. The body formed by the ECB, and the national central banks (NCB) of all the member states of the European Union, constitute the European System of Central Banks (ESCB). The ESCB is an institutional framework of a single monetary policy for the euro.

Headquarters : Hôtel de Toulouse in Paris