Monetary policy in France: 5 stages

Unlike other countries, including Russia, where data on transactions that meet certain criteria, must be handed in to the authorities to combat money-laundering, in France today, the financial intermediaries to decide whether or not a suspect transaction. A whole system of currency regulation in France was in its development stages.

Phase One - the beginnings
The first phase - the emergence of the public currency regulation. The need to regulate exchange relations emerged as a result of World War I, depleting the national economy, plunging world powers in the state of ruin. Monetary systems of those countries that are already in a state of permanent crisis, had been violated. Therefore, with France in August 1914 introduced a compulsory course of banknotes and lift them to the gold exchange.

After the Great Depression and the subsequent devaluation of its dollar and pound sterling relative to the franc has been breached the main advantage of France - the low cost of the national currency. In 1935 the country began on capital outflows. There was a need to exchange control. There followed the first action to prevent capital outflows. In 1936, the Bank of France encouraged the commercial banks not to:

? sale of foreign currency to residents without proof of its need for commercial purposes;
? sale of foreign banknotes to individuals, except for tourists;
? granting of loans in French francs for speculation on the Stock Exchange;
? speculation with the French franc;
? selling gold for tezavratsii.

But these measures proved ineffective, as the half wore, a recommendatory nature. The government was compelled to enact a law prohibiting the operation of gold and its import-export without permission from the Bank of France, and a series of devaluations in the 1936-1938 biennium. These actions and the commitment not to reintroduce exchange controls made it possible to restore a significant amount of .

Thus, before World War II France had used several methods of exchange relations: an end to exchange banknotes for gold, the devaluation of the gold content, a number of recommendations to the central bank, the prohibition on the operation of gold and its exportation. All restrictions were short and indecisive, and the balance in the money and forex markets has been driven mainly by the devaluation.

September 3, 1939 France went to war. At the same time signed a decree banning the transfer of any sums to the territory of the enemy. September 9, was issued a new decree prohibiting and regulating the export of capital, foreign exchange and trade in gold. It provided:

- Ban the export of capital, without the permission of the Minister of Finance in relation to natural and legal persons in France, as well as the translation of French francs to an account in foreign banks;
- The compulsory surrender of the proceeds of exports of goods and services, other income earned abroad in foreign currency, for a period of one month from the date of receipt;
- Creation of a special government body - the Monetary Bureau, Governor of the Bank of France on behalf of and by the Ministry of Finance.

The new body has the right to bring order to carry out foreign exchange operations, bank institutions and brokers, appointed by the Minister of Finance on the proposal of Governor of the Bank of France.

Thus, currency regulation in this period were temporary in nature and was used as an exceptional measure due to irregularities in the economy and capital outflows. Therefore, it was a half, little thought has been used mainly for solving problems of this nature.

Second Stage - regulations
The second phase (1945-1958 gg.) - A rigid system of exchange controls. After World War II in the Foreign Exchange Management France qualitative changes occur. It becomes a permanent nature, but is sold mostly in the form of currency restrictions. The system of currency restrictions in France during this period begins with the decree of 15 July 1947, and certain orders issued by the Ministry of Finance and Economy, or within the Ministry Monetary Bureau.

This decree provided the foreign exchange bureau right:
? requisition foreign currency and gold;
? prescribe French nationals and corporations, as well as foreigners residing in France, the transfer to the Exchange Stabilization Fund of their assets in foreign currency;
? to issue permits to importers buy foreign currency they need to pay for imported goods.

The adoption of such severe restrictions had been due to a number of important reasons.

First, the post-war period until the end of 1958 was characterized by a deficit balance of payments and a series of devaluations to increase exports. The total balance of payments deficit from ongoing operations for the 1946-1958 biennium. amounted to $ 10.5 billion.

Secondly, the increased external debt of France, which at the end of 1958 amounted to approximately $ 3 billion in the third, the colonial war caused budget deficit. In 1958 it amounted to about $ 1.2 billion. March 25, 1957 in Rome, the heads of the six states (Germany, Belgium, France, Italy, Luxembourg, the Netherlands) have signed a contract . In order to eliminate the barriers that divide Europe into the contract were laid four basic principles of economic and social freedoms: freedom of movement of persons, goods, services and capital. Currency regulation in France is now becoming more specific, often manifested in a rather rigid form. This was the result of increasing competition among leading world powers and the rapidly growing United States leadership. Thanks to the measures taken, the French managed to stabilize the currency, and set yet fragile, relative stability of the currency.