The French monetary institution has been in existence for over two centuries. Its history reflects France's political, economic and monetary transformations. Now part of the European System of Central Banks, it retains a unique legal status that merits examination.
1. From its creation in 1800 to European integration
The origins of the Banque de France
The Banque de France was created by a decree of the consuls on 28 Nivôse An VIII (18 January 1800) in the form of a joint-stock company, a legal structure designed to demonstrate its independence from the government. The public was wary of paper money after the failure of assignats.
The law of 24 Germinal year XI (14 April 1803) gave it the privilege of issuing banknotes. This issuing monopoly, initially limited to Paris, was gradually extended to the whole of France.
The initial legal framework remained the Imperial Decree of 16 January 1808, known as the "Basic Statutes". The Bank moved to rue de la Vrillière in Paris, in the former Hôtel du Comte de Toulouse, where its head office is still located today.
Nationalisation in 1945
After the Second World War, as part of a policy of nationalising key sectors of the economy, the Banque de France was nationalised by Act no. 45-015 of 2 December 1945. This reform did not change the bank's original form as a public limited company, but made the State its sole shareholder. The former private shareholders were compensated with bonds, the last of which were redeemed in January 1965.
Despite this nationalisation, the decree of 31 December 1936 governing its operation remained in force. It was not until Law no. 73-7 of 3 January 1973 that its articles of association were revised, providing greater flexibility in the way it carried out its activities.
Successive reforms and the impact of the Maastricht Treaty
The Maastricht Treaty of 7 February 1992 overturned the status of the Banque de France. The implementation of Economic and Monetary Union (EMU) required a radical overhaul of its relationship with the State.
The law of 4 August 1993 attempted to bring the Bank's statutes into line with Community requirements, particularly the rule of independence from the State. This law was partially censured by the Constitutional Council in its decision no. 93-324 DC of 3 August 1993. Following the entry into force of the Treaty on 1 November 1993, the rejected provisions were reinstated by Law no. 93-1444 of 31 December 1993.
The creation of the European System of Central Banks (ESCB) on 1 June 1998 and the transition to the third stage of EMU on 1 January 1999 required further changes, which were introduced by Law no. 98-357 of 12 May 1998.
Today, the provisions relating to the Bank are incorporated into the Monetary and Financial Code, where they form Title IV.
2. Legal nature and applicable regime
The sui generis status of "public entity".
For a long time, the legal nature of the Banque de France was unclear. The Act of 4 August 1993 simply described it as "an institution whose capital belongs to the State" (article L. 142-1 of the Monetary and Financial Code).
A decisive clarification came with the decision of the Tribunal des conflits on 16 June 1997 (La Fontaine de Mars company), which describes the Banque de France as a "public entity". The Conseil d'État clarified this concept in its opinion of 9 December 1999: it is a "sui generis public entity" and not a public establishment.
This specificity was confirmed in the judgment of 22 March 2000 (National Autonomous Union of Banque de France Staff), in which the Conseil d'État ruled that the Banque de France "does not have the character of a public establishment, but has a special nature and its own specific characteristics".
The independence guaranteed to the Banque de France by Community law (Article 108 of the EC Treaty) and by national law fundamentally distinguishes it from public institutions, all of which are subject to State control.
Applicable law and jurisdiction
Integration into the ESCB complicates the legal rules applicable to the Banque de France and the determination of the competent courts. Depending on the case, Community law and domestic private or public law apply.
The Court of Justice of the European Communities hears disputes relating to the application by the Banque de France of its obligations under the EC Treaty and the Statute of the ESCB. It has jurisdiction if the Governor of the Bank is relieved of his duties for a reason not provided for in the texts.
Article L. 144-2 of the Monetary and Financial Code states that the Bank's operations and the management of activities other than those relating to the ESCB are governed by civil and commercial law. Disputes arising therefrom are subject to the jurisdiction of the courts.
On the other hand, under article L. 144-3, disputes relating to the internal administration of the Bank or between it and the members of the Monetary Policy Council, the members of the General Council or its staff are referred to the administrative courts.
Case law has specified that if the activity in question constitutes a public service mission involving the exercise of public authority (such as keeping a file of payment incidents), the authority is administrative.
Budgetary, accounting and tax regime
The Banque de France's budgetary system provides for the annual adoption of an estimate of income and a budget of expenditure by the General Council. Within four months of the end of the financial year, the Council deliberates on the accounts, after reading a report by the Governor and the auditors.
From a tax point of view, Article 1654 of the General Tax Code states that the Banque de France "pays taxes under the conditions of ordinary law", without any special arrangements.
3. Control and transparency
The role of the Court of Auditors
The Banque de France is subject to the control of the Cour des Comptes (Court of Auditors) in accordance with article L. 133-1 of the Financial Jurisdictions Code. This jurisdiction implies the jurisdiction of the Court of Budgetary and Financial Discipline with regard to the Bank's directors and employees.
Article 58.2° of the Organic Law no. 2001-692 of 1 August 2001 allows parliamentary finance committees to ask the Cour des Comptes to carry out investigations into its management. The first application of this provision concerned a report on the Banque de France network in 2003.
Reporting obligations
Until 2003, the Banque de France published a weekly statement, a sort of simplified balance sheet, in the Journal officiel. Article 76 of the Financial Security Act of 1 August 2003 abolished this obligation, on the recommendation of the ECB. Information on the balance sheet is now given in its annual report.
Relations with public authorities and Parliament
The Bank's independence must be reconciled with the transparency of its actions. At least once a year, the Governor submits a report on his activities to the President of the Republic and to Parliament. He may be heard by the Finance Committees of the Houses of Parliament, either at his own initiative or at the initiative of the latter (article L. 143-1 of the Monetary and Financial Code).
In addition, the Prime Minister and the Minister for the Economy may attend meetings of the Monetary Policy Council, but may not vote.
4. Recent developments
Impact of the 2007-2008 reforms
Act 2007-212 of 20 February 2007 amends the organisation of the Bank to take account of the transfer of monetary power to the European Central Bank. It adds two new members to the General Council, appointed by the Council of Ministers. The professional secrecy of its members is now enshrined in law.
The Monetary Policy Council became a simple formation of the General Council, renamed the Monetary Committee of the General Council.
Law no. 2008-776 of 4 August 2008 (known as the "LME") completely abolished this committee, which had become obsolete following the transfer of monetary prerogatives to the ECB.
Reorganising governance
Under article L. 142-2 of the Monetary and Financial Code, the General Meeting is responsible for deliberating on matters relating to the management of the Bank's activities, staff regulations and the use of own funds.
The abolition of the Monetary Committee reflects the institutional reality: the Banque de France is now no more than a national relay for the application of decisions taken by the ECB Governing Council.
The new financial stability remit
Act no. 2013-672 of 26 July 2013 created article L. 141-5-1 of the Monetary and Financial Code, which makes the Banque de France responsible for overseeing the stability of the financial system, in conjunction with the High Council for Financial Stability.
The Banking and Financial Regulation Act of 22 October 2010 strengthens the Bank's powers to oversee securities settlement systems. It allows the Bank to pass on information covered by professional secrecy to other authorities and to enter into cooperation agreements.
These developments reflect a shift towards supervisory and stability missions, compensating for the loss of traditional monetary functions.
Sources
- Monetary and Financial Code, articles L. 141-1 to L. 144-5
- Treaty establishing the European Community, articles 105 to 115
- Law 45-015 of 2 December 1945 on the nationalisation of the Banque de France
- Act 93-980 of 4 August 1993 on the status of the Banque de France
- Act 98-357 of 12 May 1998 amending the statutes of the Banque de France
- Constitutional Council decision no. 93-324 DC of 3 August 1993
- Tribunal des conflits ruling, 16 June 1997, La Fontaine de Mars company
- Council of State ruling, 22 March 2000, National Autonomous Union of Banque de France Staff
- Act 2007-212 of 20 February 2007 amending the statutes of the Banque de France
- Law no. 2008-776 of 4 August 2008 on the modernisation of the economy
- Law no. 2013-672 of 26 July 2013 on the separation and regulation of banking activities
- Document "The European System of Central Banks and the Banque de France" by Gabriel Montagnier, February 2004
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