The Banque de France ( BdF ) is the French Central bank. Banque de France is not a private company, it is an institution whose capital belongs entirely to the State.

Created on January 18th, 1800 by the first consul Napoleon Bonaparte, it had for first role to issue payable tickets with the carrier and sight. In 1806, it installs its seat in the old private mansion of the Count de Toulouse Louis Alexandre of Bourbon (1678 † 1737), street of Vrillière, in the 1st district of Paris. The reception of the public being made with 31 rue cross Small Fields.

Institution bicentenary, nationalized in 1945, independent of the political power since 1994, Banque de France lost its autonomy when the Monetary policy of the Euro area was entrusted to the European Central bank (ECB). BdF is member of the European Système of central banks and, its governor sits at the council of the governors of the ECB. Because of the reduction of the field of competence of Banque de France, the number of employees, who profit from a special diet of retirements, is dedicated to decrease.

History

Privilege of emission to the statute of independent central bank

The Banque de France of 1800 to 1936: The development of the issuing house

Creation of Banque de France

Created on January 18th, 1800 by the First Consul Napoleon Bonaparte, with an aim of supporting the resumption of the economic activity after the strong recession of the revolutionary period, Banque de France was in the beginning charged to issue bills payable at sight and with the carrier, n the other hand of the rebate on bills not due of trade. Enough modest, carrying on its activity only in Paris, it shared, with five other establishments, the role to issue banknotes.

The writers of the statutes, to overcome the mistrust of the public with respect to the paper money, following the fiasco of the Bank of Law, preferred to entrust putting into circulation of this one to an independent authority of the public authorities. Banque de France juridically appeared itself as a public limit company to the capital of 30 franc million divided into 30.000 registered shares of 1.000 francs. The shareholders were represented by 15 regents and 3 critics. The meeting of the regents trained the General advice of the Bank which elected in its center a central committee made up of three members whose president was of right President of the General advice. The central committee was in charge of the direction of the whole of the operations of the Bank.

Protected by the Bonaparte Government, Banque de France obtained on April 14th, 1803 (24 germinal year XI), the exclusive privilege of emission for Paris, for one 15 years duration, and the capital was increased by 15 franc million, this amount making it possible the Bank to absorb the other transmitters establishment. The emissions of tickets had as a counterpart the gold deposits of the customers and the rebates on bills not due of trade. The banknote was however not an instrument of very widespread payment since the least cut was of 500 francs, which corresponds about to a value of 900 € current. In the first years of the XIXe century, it was thus used only for the important payments, monnayé gold ensuring the current payments.

The first years of operation of Banque de France did not go however without difficulty: crisis of public finances, reduction in boxes Bank involving of the restrictions on the refunding of the tickets. They led Napoleon to cause a reform intended to give again with the government a greater authority on the direction of the establishment. It is in this spirit that was realized, by the law of April 22nd, 1806, the reform of Banque de France. The direction of the businesses of the Bank, entrusted up to that point to the central committee, from now on was ensured by a governor and two deputy governors named by the State. The privilege was prolonged twenty-five years beyond the first fifteen years and the capital carried from 45 to 90 franc million, but the administration of the Bank was free to carry out this increase by successive stages. The Bank, said the explanatory memorandum of the reform, is a public corporation. It must use of its privilege in the shared interest of the Government, the citizens and the shareholders. " The property of the Bank is in the State and the Government as much as with the shareholders ".

Two years later, on January 16th, 1808, an imperial decree promulgated the " fundamental statutes " who were to govern until 1936 the operations of the Bank. This text decided also the establishment of branches called " counters of discount " in certain provincial towns where the development of the trade made some feel the need.

The development of the network

As of 1808 of the counters of discount were created in Lyon and Rouen. Napoleon did not find that sufficient. " Banque" , wrote it in 1810, it wanted that Banque de France is present in all the extent of the Empire. However, the Minister of Finances Mollien got busy to moderate the Emperor and in his " note of Havre" , insisted on the fact that the confidence granted by the public is generally local.

This advice was taken and, thereafter, only one counter was created, that of Lille in 1810. As of the knowledge of the decree of September 8th, 1810 which authorized the Bank " to exert its privilege in the cities where it has counters in the same way as in Paris " , a true panic was started in Lyon, giving reason to Mollien. The depositors, fearing inflation and the monetary bankruptcy, withdrew their funds in account and the transactions were concluded more only with one great distrust. This panic calmed down gradually but, generally, it was feared that the discount by emission of tickets, while cause a drop in the interest rate, did not cause the capital flight.

But this distrust did not last. After the fall of the Empire, the Council of regency got busy to continue a policy of strong immediate output, by removing the unproductive loads, of which overdrawn counters. Between 1814 and 1817, the counters of discount were removed and these closings involved vehement protests of the trade and industry, brutally private of the banking contests.

The events were going besides to quickly show at the Bank the error which it had made because, following the removal of the counters, of the departmental banks were created; they appeared in particular since 1817 in Rouen, Nantes and Bordeaux. The results of their exploitation were good and it was quickly obvious that Banque de France could not ignore this evolution if she did not want to have to give up her title and even, perhaps, with its privilege with the profit of other organizations.

In 1840, the privilege of emission was extended until in 1867. The capital was, at this date, tiny room from 90 to 67,9 million. At the time of the parliamentary debate, the Bank highly was criticized, shown not to be that a bank of rediscount to the service of the houses of bank of the place of Paris and to follow an exaggeratedly restrictive emission and credit policy. The president of the Council, Adolphe Thiers, supported with eloquence, in front of the House of Commons, the request for renewal presented by the governor, the count d' Argout, which had been its Minister for Finance in 1836. He easily obtained the vote of the renewal of the privilege under so advantageous conditions for the Bank that this one made at once strike a commemorative gold medal which was given to the chief of the government.

April 27th and on May 2nd, 1848, the 15 departmental banks of issue existing were incorporated in Banque de France and continued to function like counters. To allow fusion, the capital was carried to 91,25 franc million. In 1857, this capital was thus doubled and passed to 182,5 franc million.

In 1865, Banque de France absorbed the Bank of Savoy, making sure thus definitively the privilege of emission on the whole of the territory. Lastly, in 1873, a law made obligation in Banque de France to establish a branch before January 1st, 1877 in any department where there would not be some yet. The number of the counters then quickly increased. It amounted to 160 in 1900 and 259 in 1928.

The development of banknote

It is only into 1847 that the amount of the cuts was decreased and that the tickets of 200 francs (approximately 335 € current) were put in circulation. One did not dare to go below this figure. The Government specified, at the time of the debate on this subject with the House of Commons, whom he intended to hold “paper” with the trade while prohibiting to him to be used for the daily payments and to thus penetrate in the everyday usage.

But the events were going to precipitate and cause the development of the assigned role to the ticket. The Revolution of 1848 involved important requests for refunding of tickets, and, consequently, serious difficulties for Banque de France. The decree of March 15th, 1848 put a term at it by deciding that:

• 1) the banknotes will be received like legal tender by the public cases and the private individuals (the majority of the general receivers indeed refused to accept them).

• 2) Until new order, the Bank is exempted obligation to refund the tickets in cash.
• the 3) emissions of the Bank, free hitherto, are reached a maximum for the first time and the Bank is authorized to emit cuts of 100 francs. With this provision the banknote started to penetrate in the everyday life and the movement of substitution of the ticket at piece-rates could occur.
• 4) the Bank is held to publish, every eight days, its situation with the " Monitor ".

These provisions, except for that concerning the amount of the cuts, were going however to be rather quickly repealed. August 6th, 1850, the re-establishment of the convertibility of the tickets - stop of the forced course was accompanied by the suppression of the legal tender. The decree of March 3rd, 1852 made it possible the Bank to return to the quarterly and semi-annual publications of assessment.

The decisive turn was to be taken some twenty years later. Following the reverses tested in the war with Germany, the legal tender and the forced course were again proclaimed on August 12th, 1870. Moreover, to answer at the requests of small cuts, the emission 'of tickets of 25 francs was authorized on this same date (tickets of 50 francs could be emitted since 1857). Lastly, the law of December 29th, 1871 gave to the Bank the authorization to issue tickets of 10 francs and 5 francs. The ceiling of 1' emission futrelevé consequently.

In addition, the law of August 3rd, 1875 laid out that the forced course would be abolished as from the moment when the advances in the State would have been reduced to 300 million, which occurred on January 1st, 1878. But the same text specified that the legal tender of the tickets would continue to remain after the suppression of the forced course. Thus the banknote became a true currency; the role of Banque de France as a direct saddle jib crane of the credit to the trade and industry was with its apogee.

The privilege of emission

First of all limited to Paris, the privilege of the Issuing house was wide in 1810 in all the places where counters were created, then, in 1848, with the whole of Metropolis. It applied to Savoy in 1865 after the fastening of this territory in France.

The law of December 2nd, 1945 had extended, without time limit, the privilege which had been conceded to him initially in 1803, for a 15 years term, and that the legislator had successively renewed into 1806,1840,1857,1897, and 1918 until December 31st, 1945. The law of January 3rd, 1973 then of August 4th, 1993 (article 5) began again purely and simply this provision.

January 1st, 1975, this privilege extended to the Overseas departments: the tickets of Banque de France were introduced into these territories with the legal tender and the legal tender capacity and gradually replaced the tickets issued before by the Issuing house of the Overseas departments.

The Law of August 4th, 1993 reaffirmed the privilege of emission by stipulating that Banque de France is only entitled to issue tickets which are received like legal tender on territory of the Metropolitan France.

With the emission of the tickets in Euro, the privilege of emission of the National Central banks (BCN) was transmitted to the Européenne central bank, which can however delegate part of the management of the fiduciary circulation of the Euro tickets to the BCN. This event marked an important page of the history of our institution.

The mode of emission

Until 1848 and of 1850 to 1870, the emission is remained entirely free. The Bank was only held to ensure, with the carrier and sight, the convertibility of its money or gold tickets in cash.

The institution of the course forced in 1848 was accompanied by the legal levelling off of the emission. This system disappeared in 1850 with the return to convertibility. When the war of 1870 involved once again the re-establishment of the forced course, the emission was replaced under the mode of the ceiling. But, contrary to what occurred in 1850, Banque did not recover its freedom when the franc became again convertible in 1878. A law of 1875 had definitively granted the legal tender to the ticket and consequently justified the maintenance of a quantitative control. The system of the ceiling remained in force until 1928, given that, to take account of the needs for the public, the maximum volume of the emission was carried, by stages, of 1,8 billion in 1870 to 58,5 billion old francs in 1925.

The monetary law of June 25th, 1928, by restoring on new bases the convertibility of the franc suspended in 1914, subjected the fiduciary circulation to a new mode: minimum percentage of cover. Thus, until September 1st, 1939, Banque de France was held to preserve one boxes gold at least equal to 35% of the cumulated amount of the bearer orders in circulation and the accounts - credit currents open on its books. The obligation forced on the Bank to refund, in ingots, on the carrier and sight, the tickets presented to its central seat, was suspended on October 1st, 1936.

Since 1939, the fiduciary circulation is subjected any more to no legal limitation. The monitoring is exerted from now on on the generating operations of the emission of tickets: purchases of gold and currencies, advances in the State and appropriations with the economy. This flexible mode falls under the direction of the evolution of the economic thinking and the monetary practices of the public. Besides it is not advisable to consider that being given the importance acquired by the representative money, the volume of the fiduciary circulation, as such, does not have any more but one relative significance, even if one cannot deny of it the psychological influence on the opinion. Only in fact the variations of the total money supply import. The Monetary authorities make an effort, by their own action, to adapt the general liquidity to the needs for the economy, but their responsibility cannot be separate among that of the Public authorities whose general policy (budget, wages, price…) also exerts a direct or indirect influence on the creation of means of payment.

Evolution of the functions of the Bank to the statute of independence in 1993

Issuing house directly distributing appropriations to the economy at the beginning of the XXe century, the Bank gradually saw its responsibilities widening and evolving/moving notably to lead in the modern missions of a central bank which the Legislator in 1993 entrusted to him at the same time as his independence.

An important historical function (today completed): contests in the State

N the other hand privilege of Emission, the State imposed on the Bank a certain number of loads whose public and Treasury are the recipients. This role of banker of the State which was it his, is the result of a long evolution during which, n the other hand of its privilege of emission, the Bank was led to grant to the Treasury an increasingly broad contest, before the introduction of its Cependant independence, the Treasury and the Bank always maintained a strict distinction between their respective functions. Contrary to certain foreign issuing houses, Banque de France does not assume the direct management of the national Debt, it is neither the accountant, nor the cash clerk of the State. The Treasury has its own finance departments and centralizes itself the availabilities of its " correspondants" , in particular those of the Deposit and consignment office, and the Post office (asset of the Centers of accounts - postal checks).

Its competition for A-grade officials historically took the form of permanent advances taken in only once and provisional advances functioning like credit lines.

The rate/rhythm of the public receipts not corresponding to that of the national expenditure, this last did not fail to call upon the Bank, as of its creation, in order to facilitate the implementation of the budget. During more than fifty years, the current assistance of the Bank took primarily the form of rebate on bills not due shot by the Treasury at certain debtors.

These facilities of treasury, authorized hitherto under the statutory conditions, were widened in 1857 during the renewal of the privilege of emission. Under the terms of a convention, the Bank was then committed granting the Treasury of the refundable advances to the expiry of the privilege, fixed in 1897, for an amount which can go up to 80 franc million. Agreed in 1857 to the rate fixed for the discount commercial, they ceased bearing interest as from 1897.

To take account of the development of the budgetary operations, these advances, to which the successive extensions of the privilege of emission gave a permanent character, were increased on several occasions to be established finally to 50 billion old francs in 1947.

The contest of the Bank was not limited to supplement the working capital of the Treasury. It appeared with width at the time of extraordinary events where the State was to call upon all the possible ways of financing. It was the case during the wars of the Empire, those of 1870 and 1914 and, more recently still, of 1939 to 1945. The Bank was also put at contribution, in 1926, then very often of 1936 to 1958, to make it possible at the State to face cash shortage born of the imbalance of the budget.

Of all these provisional advances, those authorized before 1936 are of nothing any more but one historical interest. They were completely refunded with the assistance, according to the case, of budget surpluses (before 1914, of 1926 to 1928), of public loans (1926-1928), of the product of the revaluation of boxes (in 1928).

On the contrary, the “provisional” contests granted, with the help of a commission, by the Bank in the State since 1936 were not completely audited in spite of the assignment with their refunding of exceptional receipts (national loan in 1945, counterpart of the tickets not presented to refunding during the exchange of 1945…). Only " advances spéciales" agreed into 1953 were completely refunded of 1954 to 1956 using current resources. Since January 1st, 1994, the law of August 4th, 1993 relating to the statute of Banque de France prohibited to this one in its article 3d' to authorize overdrafts or to grant any other type of credit to the Treasury or at any other public organization or company, just as the acquisition of titles of their debt. Banking services (cash transactions, behavior of account, placement of the Treasury bills, etc) still ensured by the Bank on behalf of the Treasury from now on are remunerated by the State.

The Banque de France and the policy of exchange

The banknote was detached gradually from its base gold during the 20th century: the forced course, founded in 1914, only partly was not removed in 1928, then restored in 1936. Since this date, the value of the ticket rests primarily on the confidence which the public grants to him, confidence itself based on a healthy monetary management. Gold thus ceased being an internal means of payment to become only one monetary reserves which Banque de France naturally had to manage. It was thus led to supervise the fluctuations of the courses of the foreign currencies. From 1926 to 1928, it was in charge of the stabilization of the franc. In 1936, the State entrusted to him the management of the Exchange equalization accounts.

The Exchange equalization accounts was created by the law of October 1st, 1936 which entrusted management of it to Banque de France. The Funds of Stabilization does not have a physical existence. It does not even have the legal personality. It is a simple countable institution, which the Bank manages on behalf of the State and within the framework of the general instructions of the Minister for the Economy and Finances. That means on the one hand that the Bank is an agent - with the capacities, actually, very flexible and, on the other hand that the profits and losses resulting from the operations of the Funds fall to the Treasury. The product of the possible liquidation of the Funds must be devoted by the State with the refunding of the loans that the Bank agreed to him.

Conceived in the beginning to make respect the legal limits imposed on the fluctuations of the franc, the Funds continued its regulating role under the mode of the floating Changes adopted in 1936. By 1939 to 1948, the closing of the foreign exchange market and the fixing of rigid courses reduced the role of the Funds to that of a simple cash clerk, providing and buying the currencies corresponding to the authorized operations. Since 1948, the progressive re-establishment of the freedom of the exchanges restored at the Bottoms its initial attributions. To December 1958, goes back at which France, in.liaison.with other European countries, placed his currency under the mode of external convertibility, until 1971, the Funds was held to intervene on the foreign exchange market, in such a way that the courses of the currencies do not deviate from the official parity beyond some limiting. Obviously, the Funds kept faculty to intervene inside even of the authorized limits of fluctuation.

The obligation forced on the Funds to intervene with fixed courses, thereafter, lost its permanent and automatic character. Within the framework of the two-tier foreign exchange market instituted in August 1971, it ceased its systematic interventions on the compartment " financier " where were negotiated the currencies necessary to the noncommercial transactions; on the market " official " , where the opérations" were regulated; commercial " , it had to continue to apply limiting courses only for the currencies of the country having adhered to the Européen agreement to the contracting of the limits of reciprocal fluctuation (" the snake "). This last obligation was raised in January 1974 and the mode of two-tier foreign exchange market was abandoned in March 1974. Starting from May 9th, 1975, the Funds was again held to defend a fixed parity of the franc within the framework of the obligations of the " serpent" Community; in March 1976, the French currency floated again freely, so as to prevent that the defense of a course given and disputed by the speculation, then particularly sharp, does not lead to an exhaustion of monetary reserves.

Independently of engagements resulting from the EMS, the Exchange equalization accounts also has the role of supervising the open market of gold. Lastly, it is charged to finance the whole of the operations of France with the IME and the Funds International currency, including the operations on " drawing rights spéciaux" (SDR) created within the framework of this last institution since January 1970. It provides these functions using the advances in francs which Banque de France provides him.

Article 3 of the law of August 4th, 1993 prohibiting Banque de France from granting any form of contest the State, the Exchange equalization accounts cannot any more profit from advances of the Central bank and its operations are from now on, under convention on the monetary reserves, financed by the budget of the State. This convention also organizes the methods of the progressive auditing - over ten years - sums advanced by the Bank in the State. In fact, under the mode of the law of 1993, it is no more beneficial to make play at Bottoms the part of intermediary which was it his initially. elsewhere, in accordance with the relative tendencies with the installation of the Euro on January 1st, 1999, the policy of exchange from now on is decided on the Européen level by the Européen system from central banks and is implemented by the national Central banks within the framework defined by the Européenne central bank.

If the Exchange equalization accounts still continues to exist today, its attributions were very largely decreased with the installation of the single currency and the System European of Central banks. Already the reform of the statutes of Banque de France in 1993 had transferred to the Bank management from the reserves from the State, which were left the FSC towards the assessment of the Bank to the beginning of the year 1994. With regard to the management of the relations between France and the Funds International currency, convention March 31st, 1999 transfers from now on accounting from the relationships to the IMF in the assessment of the Bank.

Banque de France, banks of the banks

Of Issuing house, directly distributing the credit to the trade and industry, the Bank was gradually transformed into bank of the banks, body of compensation and ultimate reserve of credit for the banking system. In this respect, the Bank decided into 1970 to put an end to its operations with the direct customers which were not representative any more of the evolution of her activity and her statutes. Indeed, the proportion of the discount direct in the wallet, which was still of half in 1935, had passed to the quarter in 1939, had bent with less than 10% in 1945, and, ultimately, had fallen to approximately 0,5%. In the same way the credits on securities, which can be granted banks besides, represent only one negligible fraction of the whole of the operations of credit. The contests of the Issuing house were not thus granted any more but to finance companies. As a body of compensation of the banking system the Bank was brought to the wire of time to organize and supervise the good performance of the systems of payment, since the clearing houses historically built on the counters of the Bank, until the centralized systems of payment of large amounts (type system TARGET used since 1999). In this respect, the prevention of a systemic risk caused by important banking failures and propagated by the interconnection of the systems of payment, led the Bank naturally to exert a monitoring of the finance companies themselves, and to fill, where necessary, the function of " lender in last spring ". Financial stability thus became an economic issue and policy of importance, which as well as the price stability: , figure from now on in the statutes of SEBC. It takes an all the more large importance for the Bank that, pursuant to the principle of subsidiarity established by the Treaty of Maastricht, financial stability is a responsibility exerted at the national level.

Banque de France and the monetary policy

With the extension of its attributions to the supply of liquidities to the banking system and the organization of the credit, Banque de France was thus brought to take an active part more and more in the monetary policy.

If it is true that banks profit from capacity from creation monetary (by the appropriations which they grant), this capacity is not limited less by it by the constraints of liquidity which are essential on them. In fact, to face the withdrawals of tickets, with the transfers of funds of their customers towards the Treasury or with possible purchases of currencies, the banks must have " currency centrale" that they get by yielding some of credits at the Central bank. It is by this dependence of the banks towards the " currency centrale" that the Central bank can influence the behavior of the banks, and thus direct the monetary policy, while varying, either the quantity of central currency available, or its price (the interest rate). The action of the monetary authorities on the distribution of the credit was organized a long time around direct interventions, in the form of selective orientation of the credit (instructions at the banks, agreements of classification), or of quantitative limits to the progression of the banking contests (the credit rationing), and if these direct instruments have for the majority be abandoned in the context of today, their historical importance must be recalled:

; Selective orientation of the credit

Instructions at the banks: within the framework of the procedures for action in force before 1986, Banque.de France could give to the banks instructions recommending liberalism with regard to certain branches of activity or inviting to the rigor towards other sectors. It could in particular require that the bank credits stick, in priority, to finance the projects in conformity with the national targets of economic expansion. The possible control of the execution of such directives was facilitated by the fact that the banks were to give to Banque de France, each time the total of the granted facilities reached or exceeded 25 million, the last assessment accompanied by the profit and operating statement and losses, the decomposition of the granted facilities, the amount of the investments of the current year; the communication of these documents was to be renewed at annual rate.

Agreements of classification: at the time of the granting of the agreements of classification and in particular of those concerning the medium-term appropriations, which relate to relatively high amounts, Banque de France decided within which limits it would accept or not the later mobilization of the studied appropriations; it was thus able to give the priority to certain contests and to draw aside some from others. However, the effectiveness of this action was reduced by the fact that the banks, become less anxious to match their medium-term contests of facilities of mobilization, granted the majority of the appropriations of this type apart from the procedure of mobilization. Under these conditions, the agreements of classification were the object a deep reform in 1986 aiming at simplifying the procedure, while preserving the possibility for the finance companies of holding a sufficient volume of credits likely to be used as support with the interventions of Banque de France. Since, the finance companies could classify among their eligible credits with the interventions of the Issuing house a given fraction of the appropriations which they grant the companies being the subject of a favorable quotation allotted by Banque de France within sight of the book.

; The credit rationing

In France, limitations with the progression of incur were decided with various recoveries and a decree of February 5th, 1970 intervened to specify the details of implementation of the policy of limitation of the banking contests. This text conferred in particular on Banque de France the capacity to fix the rates of growth maxima imposed on the banks for the distribution of appropriations. The credit rationing was an at the same time simple and effective device. Moreover its action was fast because, within the framework of the annual rate of progression which was assigned with contest, the banks could be forced to respect quarterly or monthly limits. It finally made it possible to avoid having recourse to a dear money policy, often badly tolerated by the industrial economies and having also the disadvantage of causing inappropriate movements of foreign hot money.

It remains that the credit rationing offered to him also serious disadvantages being attached to two principal ideas:

• the determination, by anticipation, of rates of growth which are at the same time compatible with the maintenance of balance monetary and tolerable by the nation's economy was not easy matter to achieve;

• applied without distinction to all the banks, the limitation of incur penalized the establishment most dynamic and tended to solidify the aspect of the profession by distorting the normal play of competition.

One had endeavoured to introduce more flexibility into the system in substituent with a more strict framing one penalization of the goings beyond by additional reserves whose rate reached rather quickly prohibitory levels besides. The credit rationing had, moreover, with the wire of the inflections of the economic situation, gained in selectivity; thus had been exonerated from the reserves additional (or subjected to modes much more favorable than the ordinary appropriations) the loans profiting from allowances of the Treasury (except for the loans of saving for house-purchase), the contests in currencies, the whole of the export credits, finally the appropriations financing of the operations supporting of energy saving. Lastly, a considerable element of easing in the credit rationing consisted in the possibility for the fixed establishments, to deduce from the plate of the appropriations subjected to the additional reserves, the increase Net in their debentures and equities (" net" mean after deduction of acquisitions of obligations, fixed assets and participations). This provision shows that the credit rationing was not an end in itself, but was intended to slow down the monetary expansion; the banks could thus develop their appropriations, when those were not accompanied by an of the same development going up of their liability " monétaire" (sight deposits or short-term). The rise of the bond market in 1980 and 1981 made it possible the finance companies to very largely use these faculties.

But if the introduction of the selectivity were likely to present many advantages, it increased the difficulties of management of the system. It was indeed necessary to envisage the evolution of the exonerated appropriations whose one encouraged the granting. In addition, one introduced distortions inside the banking system, whose certain elements were favoured by the situation that they had acquired as regards exonerated appropriations. The system thus became of an increasing complexity while the evolution of the financial position made it increasingly ineffective. Thus the installation of the market of the commercial papers at the end of 1985, allowing nonbanking companies to make credit with other nonbanking companies (" desintermediation "), difficult the maintenance of a monetary mode of regulation made based on the quantitative control of the bank credit. The prospect for the release of the movements of capital made in addition it inoperative in the long term. Indeed, it appeared, with the experiment, that the bulk-heading of the market of the money between the compartment of the long run (gone of the obligations), largely opened with all the operators, and that of the short term (money market) reserved for a small number of speakers, presented a certain number of disadvantages:

• there did not exist satisfactory alternative between the short-term obligations and placements, both for the lenders the borrowers;

• the range of the instruments of placement at the disposal of the investors and borrowers appeared insufficiently diversified;

• the bulk-heading of the market and the absence of a standardized product constituted main obstacles with the adoption of a policy of the credit based on the handling of interest and with the abandonment of the credit rationing.

It is because of these principal factors that it was decided with the autumn of 1985 to proceed to a series of reforms which saw the creation of the interbank market and markets of negotiable evidences of indebtedness, component of a vast decompartmentalized market of capital from now on. Other reasons also played, in particular the concern of modernizing the management of the national debt while making it possible the Treasury to diversify its emissions of titles and to open them with all as well as the will to make of Paris an international money market. In fact, an increasing share of the financing of the economy is carried out by other ways that the bank credit. This is why, in November 1986, the Monetary authorities gave up any form of quantitative control of the credit by removing the obligatory reserves on employment.

The direct measurements made ineffective by the development of the markets of capital then more effective instruments in this context replaced and making it possible the monetary authorities to intervene in a more indirect way by regulating the interest rate on the interbank market (handling of interest rates) and the liquidity of the banks (obligatory reserves): ; Interventions on the interbank market

One recognizes generally various advantages with the interventions on the money market compared to the discount. While discounting, the Bank of issue is passive; on the contrary, by its operations on the money market, the Bank can take the initiative while proposing with the finance companies of employment for their availabilities.

In spite of that, for a long time the interventions on the money market played in France only one weak part: the discount rate was then the rate guides fixing the output of the interest rate at sight. It resulted from this situation a rigidity which became increasingly awkward as the convertibility of the currencies increased and that the money markets of the various countries interpenetrated. It was indeed increasingly necessary to permanently maintain the interest rate on a level suitable to avoid the inappropriate movements of hot money.

For this reason, the interventions of Banque de France on the money market became extensive as from 1971 and the counter of the discount was gradually closed at the banks for the refinancings not profiting from a preferential treatment. It was considered that the technique of the interventions on the money market was more flexible than the recourse to the discount, less formal and, ultimately, adapted better to the needs for a modern economy:

- procedure for action: the level of rate desired by Banque de France on the interbank market is marked out, to the bottom, by the rate of the invitations to tender and, to the top, by the rate of the pensions from five to ten days. Interbank market rate aujour the day fluctuates normally between these two terminals. - invitations to tender: the operations on invitations to tender consisted of contests granted on the initiative of Banque de France according to a variable periodicity, in the form of pensions in the long term. They constituted the principal mode of food of the treasuries of the finance companies. Banque de France counted, via a certain number of establishments, the principal operators of the market, the requests for central currency expressed by the finance companies for the various rates which they proposed. After census of the answers to the invitation to tender and according to the estimated needs, Banque de France was used fora single rate totality or a certain percentage expressed at the rate selected and higher rates (tendering method known as " with the Frenchwoman " , whereas with the method dite" with the hollandaise" the orders are been used for the rates offered, while being useful initially most raised, to the amount of the amount brought by the Issuing house). The loans thus granted to the Place are materialized by the handing-over of total tickets of mobilization emitted by the establishments profit and representative of effects - public or deprived - answering the characteristics fixed by Banque de France. A modification intervened in September 1990: the total tickets of mobilization persisted only for the private effects; being the Treasury bills, the contests were authorized against delivery, with the account of pension of Banque de France, of a sufficient amount of goods to cover the pension.

- pensions: the finance companies could ask for Banque de France the granting of a loan in the form of pension from 5 to 10 days, via a main line operator of the market, and on the condition of having the government stock or private necessary to the guarantee of the operation (by emission of a total ticket of mobilization). Banque de France reserved the possibility of suspending its pensions from 5 to 10 days if the circumstances required it, in the event of strong tensions on the exchange markets for example. In these circumstances, it could also grant pensions 24 or 48 hours which allowed a finer adjustment of the rates.

- other operations: in addition, Banque de France could carry out all operations - purchases and sales of negotiable evidences of indebtedness, taken in pension (loans in the Place), put in pension (begun again liquidities), loans of titles together with a pledge… - which it considered useful on the interbank market, at the rate and under the usual conditions of this market.

; The system of the obligatory reserves

The system of the obligatory reserves practiced by Banque de France obliged the whole of the finance companies (banks, banks mutualists, precaution and savings banks, cases of municipal credit, finance companies, Building and loan association of France, National Crédit and Companies of Regional development) to constitute assets in credit balances as of the Central bank with competition: - of a certain amount of their current liabilities, in francs or currencies;

- of a variable fraction of some their employment (credit, leasing, hiring with option to buy, transferable securities other than the non-voting shares, Treasury bills and certificates of deposit).

No remuneration is versed on these accounts; this provision is essential because it aims, as a need, to subject the banks of the additional expenditure of debt, by the increase in the assigned percentage, and to thus control their action by the means of profitability. Under these conditions it is not necessary that the rates used are very high; the observation was very often made that they are more the variations of the rate of the reserves than their level which have a certain importance for the monetary regulation. But it is as obvious as the modifications of the rate of the reserves minima could not be frequent; they are only used to control the important fluctuations of the banking liquidity which could be not easily controlled by simple interventions on the interbank market.

The system of the obligatory reserves was reformed in 1990 and conformed to the pattern of the modifications that this device knew during the recent years, while introducing innovations intended to answer partially criticisms whose it could be the object. It resulted in:

• a fall of the rate of the reserves applicable to the term deposits and the accounts on booklets, in order to cure the risks of delocalization of the placements towards the countries where the rate of the reserves is particularly low;

• the taking into account of part of box in tickets and currencies in francs held by the establishments fixed in the calculation of the reserves consisted those, in order to reduce the inequality of treatment between the establishments which do not receive deposits of the public, little touched by the constraint of the reserves, and the large banks of deposit, largely penalized by the system.

This reform in addition gave the required to limit to the maximum the daily recourse to shipping companies of funds, and was consequently to allow a better provisioning of the automatic teller machines; it however presented the disadvantage of deteriorating the quality of the fiduciary circulation and thus required the installation of specific procedures.

Today, the whole of these procedures and instruments from now on are defined in the Européen level by the System European of Central banks, to which Banque de France belongs, and Central Bank Européenne.

Banque de France and international financial co-operation

Lastly, a function which became extensive over the contemporary period relates to the participation of the Bank in the international financial co-operation, in particular by representing the interests of France in international institutions like the Fonds international currency, and two components of the the World Bank: the international Bank for the rebuilding and the development and the the International Development Association.

It is also advisable to note the presence of representatives of the Bank in other international authorities: Monetary committee of the European Union, European Investment Bank, Banque of the International Payments, monetary Comité of the free zone.

Modifications of the statutory mode of the Bank since 1936

The extension of attributions of Banque de France was to cause a reform of the statutes to which it was subjected since 1806.

The independence limited, but real, which the Issuing house with regard to the State enjoyed, ended in 1936. The mode founded by Napoleon had had the merit, during 130 years, to preserve the credit of the Bank through the vicissitudes of the capacity, without duality instituted between the Governor, named by decree, and the General advice, elected official speak shareholders, ever caused serious conflicts. But the evolution of the economic context and policy did not make it possible any more to maintain the presence of private interests in the management and the property of the Bank.

The reform of 1936: the influence of the State

August 1st

Articulation with the ECB

June 1st, 1998, a new institution was created, the European Central bank (ECB), charged with leading the single Monetary policy of the Euro area. The unit formed by the ECB and the national central banks (BCN) of all the Member States of the European Union constitutes the European Système of central banks (SEBC).

Banque de France is dispossessed of its role of management of the monetary policy of France.

The emission and the maintenance of the fiduciary currency

The law of August 4th 1993, taking again the former texts, precise that Banque de France is only entitled to issue the tickets received like Legal tender on the territory Métropolitain. It also specifies that the Bank takes care of the good quality of the fiduciary Circulation.

The manufacture of the tickets

Since its origin, Banque de France paid more the great attention to its tickets. Very early, it obtained industrial tools able to ensure the design and the production of it, to meet the national needs but also to satisfy, if necessary, those of other foreign issuing houses, in particular African. It took part in the manufacture of the European tickets. Today still, the Bank appears among the rare central banks which ensure all the stages of the production process, of the manufacture of paper in the impression of the tickets. Industrial company which continues production targets and implements specialized professional competences, as well as materials of utmost precision, the head office of the Manufacture of the tickets devotes its efforts to the creation of tickets of beautiful invoice, of sufficient number to maintain the quality of the fiduciary circulation.

The two industrial sites manufacturing them are located at Vic-the-Count (paper mill) and Chamalières (printing works), in the Puy-de-Dôme (Auvergne).

The management of the fiduciary currency

In addition to the tickets manufactured by the printing works of the Bank, the fiduciary currency includes/understands the coins, usually called token coinages, struck by the Monnaie of Paris (old direction of the Currencies and Medals ) (ministry for the Economy) with Pessac and that Banque de France puts in circulation on behalf of the State.

Distribution and maintenance of the fiduciary circulation

The distribution of the tickets and the parts on the whole of the territory is ensured by the seat in Paris and the country branches. The Issuing house of the overseas departments and the Issuing house of overseas, fed in cuts by Banque de France, ensure this distribution in the departments and overseas territories like in the territorial collectivities of Saint-Pierre-and-Miquelon and Mayotte.

After having circulated, the tickets return in the cases of the Bank. They are quickly recognized with the unit, in order to check their number and their authenticity, and subjected to a sorting intended to eliminate those which cannot be given in circulation because of their bad condition (tickets stained, torn, covered inscriptions, used…). These two operations, recognition and sorting, are generally simultaneous, thanks to the use of automated materials of sorting. In 1996, a little more than 4,3 billion cuts were transferred with the counters of the Bank and were sorted. This activity makes it possible to face the needs for the public which could not be satisfy the only means with the new tickets. The Bank also maintains circulation the token coinages which return in its cases. The coins are checked to extract from them those which cannot be backs in circulation (false, deteriorated or foreign coins…).

Variations of the fiduciary circulation

The fiduciary circulation knows fluctuations which follow a monthly rate/rhythm and a seasonal rate/rhythm. The payment of the wages causes, in the last decade of each month and the first days of the next month, an important exit of cuts. On the contrary, between the 10 and the 20 of the month, a backward flow takes place. The public banks and accountants daily pour in Banque de France the tickets which they received with their case, but these payments are more important during this decade. The amplitude of the monthly variations is increased by seasonal factors. Circulation increases at the time of the departures on vacation and at the time of the purchases of end of the year. It contracts in tax expiry and January of principal. These fluctuations are not completely identical one year to the other. They can however be envisaged with sufficient exactitude over a short period of time. It is on the other hand difficult to evaluate in a precise way the probable evolution, over average or long period, of the fiduciary circulation. Indeed, the general economic evolution, just as the changes of practices as regards means of payment, can have on this one a considerable impact. In addition, fiduciary flows of currency vary geographically. In certain areas, the entries of tickets at the Bank exceed the exits whereas in others the process is completely reversed. Banque de France must thus take account of these disparities for its forecasts and the provisioning of its branches.

History of the French tickets

Thanks to new more powerful equipment, the manufacture of the tickets, whose production capacities can reach 1.500 million labels per annum, undertook, in the years 1990, the renewal of the range of the French tickets.

The launching of the cut of 50 francs to the effigy of Antoine de Saint-Exupéry, in 1993, marked the departure of this operation which was continued, in 1995, by the emission of the 500 francs Pierre and Marie Curie. The ticket of 200 francs to the effigy of Gustave Eiffel was put in circulation on October 29th, 1996.

Since the 01-01-2002, the circulation of the tickets in Euro replaced the tickets of Banque de France. The ticket in Euro printed in France comprise the letter “U” in front of their N° of series.

Legal status

Banque de France, before the entry of France in the economic Union and monetarist, was regarded as a public corporation related to administration. It was then placed directly under the supervision of the Prime Minister, who under the terms of article 21 of the French Constitution of October 4th, 1958. Moreover, its essential activity of regulation is active of Public service related to administration.

Nevertheless, since 1997, Banque de France cannot be thus juridically qualified any more. Indeed, it is under the supervision either of a French administrative authority, but of the European Central bank. Banque de France always has the legal Personality. The legal doctrines administrative and Community thus describes it as anybody “ Sui generis ”.

References

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