Bank of France
The Bank of France is the national central bank for France within the Eurosystem. It was the French central bank between 1800 and 1998, issuing the French franc. It does not translate its name to English, and thus calls itself Banque de France in all English communications.
The Bank of France was originally established by Napoleon Bonaparte as a private-sector corporation with unique public status. It was granted note-issuance monopoly in Paris in 1803 and in the entire country in 1848. Long independent from direct political interference, it was brought under government control in 1936 and eventually nationalized in 1945. While other banks of issue were established in the French colonial empire, the Bank of France remained Metropolitan France's sole monetary authority until France's adoption of the euro as its currency. As of 2025, its balance sheet total was $1.818 trillion, making it the 5th largest central bank in the world.
The Bank of France long held high prestige as an anchor of financial stability, especially before the monetary turmoil that followed World War I. In 1907, Italian economist and statesman Luigi Luzzatti referred to the Bank of France as "the centre of the world's monetary power."
The French framework for banking supervision was initiated by the Vichy Government in 1941 and entrusted from the start to a separate body under the aegis of the Bank of France, which in 2013 became the Prudential Supervision and Resolution Authority. In 2017 the ACPR lost its prior status as an independent administrative authority under French law, but retains a distinct governance framework that also involves the French government. The Bank of France is not itself a financial supervisory authority, but oversees payment systems and participates in European banking supervision as a member of the Supervisory Board of the European Central Bank alongside the ACPR. It is also a member of the European Systemic Risk Board.
History
Background
The Kingdom of France's first experiment with a central bank was the Banque Générale, set up by John Law at the behest of the Duke of Orléans after the death of Louis XIV. Law received the bank's 20-year charter in May 1716 and its stock consisted of 1,200 shares valued at 5,000 livres apiece. 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 bubble ultimately burst in a financial crisis in 1720, and on 27 November of that year, the Banque Royale officially closed.The collapse of the Mississippi Company and the Banque Royale tarnished the word banque so much that France abandoned central banking for almost a century, possibly precipitating Louis XVI's economic crisis and the French Revolution. Successors such as the Caisse d'Escompte and Caisse d'escompte du commerce used the word "caisse" instead, until Napoleon retook the term with la Banque de France in 1800.
Creation
In 1803, financial power in France was in the hands of fifteen members of the Haute Banque, when the shareholders' meeting ratified the appointment of a “Council of Regency” composed of Jean-Frédéric Perregaux,, Jean-Barthélemy Le Couteulx de Canteleu,, Jacques-Rose Récamier,,,,,,,, Claude Perier,,, and Jean-Conrad Hottinguer. These powerful bankers, representative of the financial elite that would become referred to in France as the Haute banque, 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 Bonaparte, 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. Banker Claude Perier drafted the first statutes and Emmanuel Crétet was the first governor of the Bank.On 24 Germinal, year XI, the new Bank received its first official charter granting it the exclusive right to issue paper money in Paris for fifteen years.
Development
On 22 April 1806, a new law replaced the Central Committee with a Governor and two Deputy Governors. All three were appointed by the Emperor. On 16 January 1808, a decree set out the "Basic Statutes", which were to govern the Bank's operations until 1936.For the first fifteen years, the Bank of France 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 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 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. 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, and tested new monetary policies in the wake of a global depression.
In World War II, the Bank oversaw the transfer of gold reserves overseas, which mainly included Canada, the United States, and the French overseas territories. In 1945, the Bank was nationalized by Charles de Gaulle and became a state-owned institution. Existing shareholders received bonds to replace their shares in the company. The Bank's statute was reformed in 1973.
In 1993, the Bank of France was again reformed when it obtained independence from the state. It sought to establish credibility by promising to adhere to the single mandate of price stability. Jean-Claude Trichet, Governor from 1993 to 2003, was the final Governor of the Bank until the establishment of the European Central Bank in June 1998. Today, the ECB sets monetary policy and oversees price stability for all countries in the Eurozone, including France.
File:ATM Banque de France.jpg|right|thumb|ATM of the Bank of France in Paris
On 1 June 1998, a new institution was created, the European Central Bank, charged with steering the single monetary policy for the euro. The body formed by the ECB, and the national central banks of all the member states of the European Union, constitute the European System of Central Banks. According to the Maastrict Treaty, the Bank would oversee the functioning of the payment system and conduct independent research on the French economy, while the newly established European Central Bank conducted monetary policy for the entire Eurozone. The French franc was replaced by the Euro as a virtual currency on 1 January 1999, being replaced entirely with coins and banknotes on 1 March 2002.
Following the Great Recession, the Bank of France implemented quantitative easing for the account of the ECB.
In 2010, the French government's Autorité de la concurrence 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 Bank recently established a "Lab", located on the Rue Réaumur in Paris, where start-ups and small businesses work on blockchain, artificial intelligence, and virtual reality. The Bank is the first to set up a blockchain system.
With the onset of the COVID-19 pandemic and the ensuing economic crisis, the Eurosystem resolved to inject €3 trillion of liquidity into banks, allowing them in turn to support households and businesses, particularly with regard to urgent cash flow needs. In addition to membership in the Eurosystem, the Banque de France is in charge of credit mediation. This service, which has been in very high demand during the crisis, provides assistance to companies facing difficulties in their relations with financial institutions. The Banque de France manages procedures to resolve overindebtedness, and while its premises are no longer open to the public, requests continue to be processed.
Activities
The Bank of France describes itself as responsible for three missions: monetary strategy, financial stability, and services to the economy.Monetary policy
The Bank of France contributes to the design of the monetary policy of the Eurozone, through macroeconomic research and forecast and by taking part in the deliberations on ECB decisions, and implements it in France. It prints euro bank notes, in larger volumes than any of its Eurosystem peers, and manages the circulation of bank notes and coins. It also participates in the fight against counterfeit money, by training bank employees, merchants, police, and other stakeholders. It manages part of the foreign exchange reserves of the ECB.Financial stability
The Bank of France participates in the prudential oversight of the French financial sector through the Prudential Supervision and Resolution Authority which operates under its aegis.The Banque de France also has special responsibilities with regard to payment systems and financial market infrastructures. It has direct oversight responsibility over LCH SA, a central counterparty ; Euroclear France and ID2S, two central securities depositories; and CORE and SEPA.EU, two retail payment systems operated by STET SA. It is also involved in the cooperative oversight of ten infrastructures for which the lead oversight role belongs to another institution:
- Four infrastructures under the Eurosystem oversight framework led by the European Central Bank: T2, T2S, EURO1, and STEP2-T;
- Four EU-based CCPs with an EMIR College: LCH Ltd, Eurex Clearing, CC&G, and EuroCCP ;
- Two global infrastructures with an international cooperative oversight framework, SWIFT and CLS.