|Established||18 January 1800|
|Governor||François Villeroy de Galhau|
|Central bank of||France|
|1 The Bank of France still exists but many functions have been taken over by the ECB.|
The Bank of France (French: Banque de France), headquartered in Paris, is the central bank of France.
It is an independent institution, member of the Eurosystem since 1999. Its three main missions, as defined by its statuses, are to drive the French monetary strategy, ensure financial stability and provide services to households, small and medium businesses and the French state.
It is a member of the European System of Central Banks, which consists of the European Central Bank (ECB), and the national central banks (NCBs) of all European Union (EU) members.
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.
In 1800, financial power in France was in the hands of about ten to fifteen banking houses[ who? ] 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 (Banque de France). 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.
The Bank was also instrumental in the creation of the Latin Monetary Union (LMU) in 1865. The countries of France, Belgium, Italy, and the Swiss Confederation established the LMU franc as a common bimetallic currency.
In World War I, the Bank of France sold short-term Treasury bonds abroad to help pay for wartime expenditures. France abandoned the gold standard shortly after the outbreak of war. Debts amounted to approximately 42 billion francs by 1919. Following the war, the Bank sought to re-establish the gold standard and acquired capital from a number of American and British banking syndicates to defend the franc from exchange-rate fluctuations. The Bank also began to hoard gold reserves and, at its peak, held 28.3 percent of the world's gold stock (only behind the United States at 30.4 percent). Some scholars have asserted that this gold accumulation was a contributing factor to the Great Depression.Under Émile Moreau, Governor from 1926 to 1930, the Bank consolidated gold reserves created a stabilization insurance fund (fonds de stabilisation), and tested new monetary policies in the wake of a global depression.
Jean-Claude Trichet, Governor from 1993 to 2003, was the final Governor of the Bank until the establishment of the European Central Bank (ECB) in June 1998. Today, the ECB sets monetary policy and oversees price stability for all countries in the Eurozone, including France.
The Bank of France is responsible for three missions: monetary strategy, financial steadiness and services to the economy.
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.
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).
The Bank of France provides services to households, businesses and the French state.
The Bank of France is in charge of offering services households in severe financial difficulty. This includes the management of over-indebtedness (one of the major tasks of the local branches of the bank), and the guarantee to an access to basic banking services for everyone, such as the right to a basic bank account.
It is also in charge of financial and economic education of the general public, by developing an economic culture among specific populations (like youngsters and households in severe financial difficulty). This includes sensitizing high school students, providing online information and educational services, training social workers and the future launch of the French Cité de l'économie et de la monnaie (Citéco), a museum based in the 17th district of Paris, to be opened in 2019.
The Bank of France provides company ratings for non-listed companies, which can for instance be used by business leaders to obtain credit from their bank.
It also manages credit mediation (mediation between companies and their banks, their credit insurers, etc.) and proposes support to very small businesses (advice for their development and needs).
The Bank of France publishes a number of economic surveys, national and regional statistics, destined to businesses.
The Bank of France is in charge of services for the French State: it holds the account and manages the means of payment of the Treasury and some public companies. It manages auctions of public securities. Finally, it establishes the balance of payments.
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).
Following the financial crisis of 2007-2008, the Bank of France implemented quantitative easing for the account of the ECB.
The governor of the Bank of France is appointed by the president and is, as of 2019, François Villeroy de Galhau, since 1 November 2015. He presides over the Bank's General Council, the body responsible for deliberating on all matters relating to non-Eurosystem activities.
The first deputy governor is Denis Beau and the second deputy governor is Sylvie Goulard.
In 2017, the main key figures of the Bank of France are the following:
In 2010, the French government's Autorité de la concurrence (the department in charge of regulating competition) fined eleven banks, including Bank of France, the sum of €384,900,000 for colluding to charge unjustified fees on check processing, especially for extra fees charged during the transition from paper check transfer to "Exchanges Check-Image" electronic transfer.
The CFA franc is the name of two currencies, the West African CFA franc, used in eight West African countries, and the Central African CFA franc, used in six Central African countries. Both currencies are guaranteed by the French treasury. Although separate, the two CFA franc currencies have always been at parity and are effectively interchangeable. The ISO currency codes are XAF for the Central African CFA franc and XOF for the West African CFA franc. On 22 December 2019, it was announced that the West African currency would be replaced by an independent currency to be called Eco.
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