[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/13138.html
   My bibliography  Save this paper

The Other Way: A Narrative History of the Bank of France

Author

Listed:
  • Bignon, Vincent
  • Flandreau, Marc
Abstract
This paper offers a comprehensive (short) history of central banking in France, starting in the 18th century and finishing with the creation of the Euro in 2001. We first discuss how the French experience with central banking in the 18th century shaped the drafting of the charter and the governance of the Bank of France in 1800. We then single out how the Bank implements its monetary policy in the 19th century and assess the bank achievement in terms of monetary and financial stability. Finally we discuss how the sovereign debt overhang triggered by World War I and the reconstruction subverted the model of central banking previously implemented, and how the reluctance of the Bank to be implicated in the management of the sovereign yield ultimately leads to the loss of its independence vis-a-vis the state. Against this background the use of financial repression under the guidance of the state allowed a smoother management of the debt overhang during the post WW II period, but created its own issues that were addressed effectively only with the creation of the Euro.

Suggested Citation

  • Bignon, Vincent & Flandreau, Marc, 2018. "The Other Way: A Narrative History of the Bank of France," CEPR Discussion Papers 13138, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13138
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP13138
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Eric Monnet, 2014. "Monetary Policy without Interest Rates: Evidence from France's Golden Age (1948 to 1973) Using a Narrative Approach," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 137-169, October.
    2. Hoffman, Philip T. & Postel-Vinay, Gilles & Rosenthal, Jean-Laurent, 2015. "Entry, information, and financial development: A century of competition between French banks and notaries," Explorations in Economic History, Elsevier, vol. 55(C), pages 39-57.
    3. repec:ulb:ulbeco:2013/177964 is not listed on IDEAS
    4. Marc Flandreau, 1997. "Central Bank Cooperation in Historical Perspective: A Sceptical View," Economic History Review, Economic History Society, vol. 50(4), pages 735-763, November.
    5. Eric Monnet, 2024. "Interest Rates," Springer Books, in: Claude Diebolt & Michael Haupert (ed.), Handbook of Cliometrics, edition 3, pages 1531-1549, Springer.
    6. Nicolas Barbaroux, 2013. "The Bank of France and the open-market instrument: an impossible wedding?," Post-Print halshs-00862854, HAL.
    7. Hautcoeur, Pierre-Cyrille & Riva, Angelo & White, Eugene N., 2014. "Floating a “lifeboat”: The Banque de France and the crisis of 1889," Journal of Monetary Economics, Elsevier, vol. 65(C), pages 104-119.
    8. François R. Velde, 2009. "Chronicle of a Deflation Unforetold," Journal of Political Economy, University of Chicago Press, vol. 117(4), pages 591-634, August.
    9. Francois R. Velde, 2003. "Government equity and money: John Law’s system in 1720 France," Working Paper Series WP-03-31, Federal Reserve Bank of Chicago.
    10. Oosterlinck, Kim & Ureche-Rangau, Loredana & Vaslin, Jacques-Marie, 2014. "Baring, Wellington and the Resurrection of French Public Finances Following Waterloo," The Journal of Economic History, Cambridge University Press, vol. 74(4), pages 1072-1102, December.
    11. Rémy Contamin, 2003. "Interdépendances financières et dilemme de politique monétaire. La Banque de France entre 1880 et 1913," Revue économique, Presses de Sciences-Po, vol. 54(1), pages 157-179.
    12. Hautcoeur, Pierre-Cyrille & Sicsic, Pierre, 1999. "Threat of a capital levy, expected devaluation and interest rates in France during the interwar period," European Review of Economic History, Cambridge University Press, vol. 3(1), pages 25-56, April.
    13. Éric Monnet, 2016. "La politique monétaire française des Trente Glorieuses," Revue d'économie financière, Association d'économie financière, vol. 0(1), pages 285-290.
    14. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1.
    15. Sicsic, Pierre, 1992. "Was the franc poincare deliberately undervalued?," Explorations in Economic History, Elsevier, vol. 29(1), pages 69-92, January.
    16. Bazot, Guillaume, 2014. "Local liquidity constraints: What place for central bank regional policy? The French experience during the Belle Époque (1880–1913)," Explorations in Economic History, Elsevier, vol. 52(C), pages 44-62.
    17. Flandreau, Marc R, 2002. ""Water Seeks a Level": Modeling Bimetallic Exchange Rates and the Bimetallic Band," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 491-519, May.
    18. repec:hal:wpspec:info:hdl:2441/648 is not listed on IDEAS
    19. Jobst, Clemens & Ugolini, Stefano, 2014. "The coevolution of money markets and monetary policy, 1815-2008," Working Paper Series 1756, European Central Bank.
    20. Vincent Bignon & Marc Flandreau & Stefano Ugolini, 2012. "Bagehot for beginners: the making of lender‐of‐last‐resort operations in the mid‐nineteenth century," Economic History Review, Economic History Society, vol. 65(2), pages 580-608, May.
    21. Bazot, Guillaume & Bordo, Michael D. & Monnet, Eric, 2016. "International shocks and the balance sheet of the Bank of France under the classical gold standard," Explorations in Economic History, Elsevier, vol. 62(C), pages 87-107.
    22. Bordo, Michael D. & MacDonald, Ronald, 2005. "Interest rate interactions in the classical gold standard, 1880-1914: was there any monetary independence?," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 307-327, March.
    23. repec:hal:pseose:halshs-01053389 is not listed on IDEAS
    24. Hubert Bonin, 2007. "Les banquiers," Post-Print hal-00222792, HAL.
    25. Shizuya Nishimura, 1995. "The French provincial banks, the Banque de France, and bill finance, 1890-1913," Economic History Review, Economic History Society, vol. 48(3), pages 536-554, August.
    26. V. Bignon & C. Jobst, 2017. "Economic Crises and the Eligibility for the Lender of Last Resort: Evidence from 19th century France," Working papers 618, Banque de France.
    27. Gorton, Gary & Pennacchi, George, 1990. "Financial Intermediaries and Liquidity Creation," Journal of Finance, American Finance Association, vol. 45(1), pages 49-71, March.
    28. Bridji, Slim, 2013. "The French Great Depression: A business cycle accounting analysis," Explorations in Economic History, Elsevier, vol. 50(3), pages 427-445.
    29. Hubert Bonin, 2006. "Histoire de la Société générale. I. 1864-1890. Naissance d'une banque," Post-Print hal-00154465, HAL.
    30. James, Harold, 2012. "Making the European Monetary Union," Economics Books, Harvard University Press, number 9780674066830, Spring.
    31. Guillermo A. Calvo & Maurice Obstfeld & Rudiger Dornbusch (ed.), 2004. "Money, Capital Mobility, and Trade: Essays in Honor of Robert A. Mundell," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262532603, April.
    32. Marc Flandreau, 2004. "The Glitter of Gold : France, Bimetallism, and the Emergence of the International Gold Standard, 1848-1873," Post-Print hal-03568230, HAL.
    33. Occhino, Filippo & Oosterlinck, Kim & White, Eugene N., 2008. "How Much Can a Victor Force the Vanquished to Pay? France under the Nazi Boot," The Journal of Economic History, Cambridge University Press, vol. 68(1), pages 1-45, March.
    34. Bignon, Vincent & Avaro, Maylis, 2019. "At Your Service! Liquidity Provision and Risk Management in 19th Century France," CEPR Discussion Papers 13556, C.E.P.R. Discussion Papers.
    35. Shizuya Nishimura & Kazuhiko Yago, 2006. "La masse monétaire en France, 1890-1913," Histoire, économie & société, Programme National Persée, vol. 25(2), pages 195-211.
    36. repec:hal:pseose:halshs-01207248 is not listed on IDEAS
    37. Eichengreen, Barry, 1996. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," OUP Catalogue, Oxford University Press, number 9780195101133.
    38. repec:hal:spmain:info:hdl:2441/648 is not listed on IDEAS
    39. V. Bignon & J. Chen & S. Ugolini, 2017. "Beneath the Gold Points: European Financial Market Integration, 1844-1870," Working papers 647, Banque de France.
    40. Marc Flandreau, 2002. "'Water Seeks a Level”: Modeling Bimetallic Exchange Rates and the Bimetallic Band," Post-Print hal-03416703, HAL.
    41. Jürg Niehans, 1992. "Juglar's Credit Cycles," History of Political Economy, Duke University Press, vol. 24(3), pages 545-569, Fall.
    42. Flandreau, Marc, 2004. "The Glitter of Gold: France, Bimetallism, and the Emergence of the International Gold Standard, 1848-1873," OUP Catalogue, Oxford University Press, number 9780199257867.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Leçons historiques des fortes augmentations de la dette publique
      by Emeline in Bloc-Notes Eco on 2020-06-10 12:52:02
    2. Historical lessons from large increases in government debt
      by GAILLARD in Eco Notepad on 2020-06-10 14:03:18
    3. Replying to Simon Wren Lewis
      by Bruno Duarte in EUnomics on 2018-10-30 06:49:32

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mr. Nicolas End & Ms. Marina Marinkov & Fedor Miryugin, 2019. "Instruments of Debtstruction: A New Database of Interwar Debt," IMF Working Papers 2019/226, International Monetary Fund.
    2. Louis Rouanet, 2021. "The interest group origins of the Bank of France," Public Choice, Springer, vol. 186(1), pages 119-140, January.
    3. Vincent Bignon & Pierre Sicsic, 2022. "Quelles leçons de l’histoire ? ou comment faire face aux fortes augmentations de dette publique ?," Revue d'économie financière, Association d'économie financière, vol. 0(2), pages 41-66.
    4. Stefano Ugolini, 2018. "The Historical Evolution of Central Banking," Post-Print hal-01887004, HAL.
    5. Carsten Hefeker, 2021. "Stable money and central bank independence: implementing monetary institutions in postwar Germany," Public Choice, Springer, vol. 186(3), pages 287-308, March.
    6. Bignon, Vincent & Avaro, Maylis, 2019. "At Your Service! Liquidity Provision and Risk Management in 19th Century France," CEPR Discussion Papers 13556, C.E.P.R. Discussion Papers.
    7. Ureche-Rangau, Loredana & Vaslin, Jacques-Marie, 2023. "Conversion risk on 19th century French consols and embedded options: A simple exercise," Finance Research Letters, Elsevier, vol. 58(PB).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bazot, Guillaume & Bordo, Michael D. & Monnet, Eric, 2016. "International shocks and the balance sheet of the Bank of France under the classical gold standard," Explorations in Economic History, Elsevier, vol. 62(C), pages 87-107.
    2. G. Bazot & M. D. Bordo & E. Monnet, 2014. "The Price of Stability. The balance sheet policy of the Banque de France and the Gold Standard (1880-1914)," Working papers 510, Banque de France.
    3. Bignon, Vincent & Avaro, Maylis, 2019. "At Your Service! Liquidity Provision and Risk Management in 19th Century France," CEPR Discussion Papers 13556, C.E.P.R. Discussion Papers.
    4. Monnet, Eric & Puy, Damien, 2020. "Do old habits die hard? Central banks and the Bretton Woods gold puzzle," Journal of International Economics, Elsevier, vol. 127(C).
    5. Vincent Bignon & Marc Flandreau & Stefano Ugolini, 2012. "Bagehot for beginners: the making of lender‐of‐last‐resort operations in the mid‐nineteenth century," Economic History Review, Economic History Society, vol. 65(2), pages 580-608, May.
    6. Stefano Ugolini, 2012. "The origins of foreign exchange policy: the National Bank of Belgium and the quest for monetary independence in the 1850s," European Review of Economic History, European Historical Economics Society, vol. 16(1), pages 51-73, February.
    7. Michael D. Bordo & Robert N. McCauley, 2019. "Triffin: Dilemma or Myth?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(4), pages 824-851, December.
    8. Marc Flandreau, Kim Oosterlinck, 2011. "Was the Emergence of the International Gold Standard Expected? Melodramatic Evidence from Indian Government Securities," IHEID Working Papers 01-2011, Economics Section, The Graduate Institute of International Studies.
    9. Calomiris, Charles W. & Flandreau, Marc & Laeven, Luc, 2016. "Political foundations of the lender of last resort: A global historical narrative," Journal of Financial Intermediation, Elsevier, vol. 28(C), pages 48-65.
    10. Monnet, Eric & Velde, François R., 2020. "Money, Banking, and Old-School Historical Economics," CEPR Discussion Papers 15348, C.E.P.R. Discussion Papers.
    11. Jobst, Clemens & Bignon, Vincent, 2017. "Economic Crises and the Eligibility for the Lender of Last Resort: Evidence from Nineteenth Century France," CEPR Discussion Papers 11737, C.E.P.R. Discussion Papers.
    12. Kris James Mitchener & Eric Monnet, 2023. "Connected Lending of Last Resort," NBER Working Papers 30869, National Bureau of Economic Research, Inc.
    13. Mitchener, Kris & Trebesch, Christoph, 2021. "Sovereign Debt in the 21st Century: Looking Backward, Looking Forward," CEPR Discussion Papers 15935, C.E.P.R. Discussion Papers.
    14. Patrice Baubeau & Eric Monnet & Angelo Riva & Stefano Ungaro, 2021. "Flight‐to‐safety and the credit crunch: a new history of the banking crises in France during the Great Depression," Economic History Review, Economic History Society, vol. 74(1), pages 223-250, February.
    15. Claude Diebolt & Antoine Parent, 2006. "Were there Anomalies in the Sterling-Franc Exchange Rate Regulation during the Mid-19th Century?," Working Papers 06-08, Association Française de Cliométrie (AFC).
    16. Clemens Jobst & Kilian Rieder, 2016. "Principles, circumstances and constraints: the Nationalbank as lender of last resort from 1816 to 1931," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 140-162.
    17. Stefano Ugolini, 2018. "The Historical Evolution of Central Banking," Post-Print hal-01887004, HAL.
    18. Gianni Toniolo & Eugene N. White, 2015. "The Evolution of the Financial Stability Mandate: From Its Origins to the Present Day," NBER Working Papers 20844, National Bureau of Economic Research, Inc.
    19. Bazot, Guillaume & Monnet, Eric & Morys, Matthias, 2019. "Taming the gobal financial cycle: Central banks and the sterilization of capital flows in the first era of globalization," IBF Paper Series 03-19, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    20. Emi Nakamura & Jón Steinsson, 2018. "Identification in Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 32(3), pages 59-86, Summer.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:13138. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.