1. THE CASE OF BANQUE DE FRANCE
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING
THE CASE OF BANQUE DE FRANCE
Bernard ENFRUN, Deputy Director General, Economics and International, Banque de France

2. Which kind of independence ? Scope and limits
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
Why the Central Bank independence has appeared imperative in France in 1993: a large public and political support
Which kind of independence ? Scope and limits
How independence, transparency and accountability have been implemented in practice ? Before and after 1999
Conclusion : the results of 12 years of BdF independence : an assessment.

3. INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
Why the Central Bank independence has appeared imperative in France in 1993: a large public and political support
The need for a low inflation rate and low long term interest rates: “competitive desinflation” and participation in the EMS,
The theory as well as the practical experience led to the conclusion that the Central Bank independence was a necessary condition,
The idea of Central Bank independence received a large public and political support.

4. EMS participation reinforced the need for low inflation rate,
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
The need for a low inflation rate and low long term interest rates: «competitive desinflation » and participation in the EMS
growing awareness of the necessity of a low inflation rate in an open world: far from being against employment, it is the condition for competitiveness and job creation,
EMS participation reinforced the need for low inflation rate,
growing awareness of the need of a credible monetary policy in order to have low long term interest rate (more than half of the financing in France was specified at long term).

5. conclusion: common agreement for Central Bank independence.
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
The theory as well as the practical experience led to the conclusion that central bank independence was a necessary condition
theory: independence, a necessary condition for monetary policy credibility and efficiency,
practical experience : despite a long practice to work together, Ministry and Central Bank failed to earn a sufficient credibility without independence,
conclusion: common agreement for Central Bank independence.

6. public opinion: strong preference for price stability,
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
The idea of Central Bank independence received a large public and political support
public opinion: strong preference for price stability,
the law of August 1993, giving independence to the BdF, voted by a large majority of M.Ps.

7. Which kind of independence ? Scope and limits.
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
Which kind of independence ? Scope and limits.
Independence strictly defined by the law: limited to monetary policy, with an objective defined by the law and approved by M.Ps
Independence implies transparency and accountability.

8. Independence in practice
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
How independence, transparency and accountability have been implemented in practice ? Before and after 1999.
Independence in practice
complete independence in interest rate fixing,
the exchange rate issue (before 1999) was more complex: complete independence in the day to day management of exchange rate,
independence backed in practice by several measures: prohibition from taking instructions, fixed mandates, collegiality, prohibition of the monetary financing of public deficit.

9. Transparency in practice
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
How independence, transparency and accountability have been implemented in practice ? Before and after 1999.
Transparency in practice
the mechanisms establishing transparency in practice (annual report, press conference, publications, communication)
a new context after 1999: the SEBC
some controversial issues : publication of minutes, publication of forecasts.

10. INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
How independence, transparency and accountability have been implemented in practice ? Before and after 1999.
Accountability in practice
to the Government,
to the Parliament,
to the general public.

11. Conclusion: the result of 12 years of BdF independence: an assessment.
INDEPENDENCE, TRANSPARENCY AND ACCOUNTABILITY IN MONETARY POLICY MAKING THE CASE OF BANQUE DE FRANCE
Conclusion: the result of 12 years of BdF independence: an assessment.
position and credibility of the Central Bank reinforced,
this has certainly helped to stabilize inflation at a low level, to maintain long term interest rates low, and by these means to reduce the public debt burden and to improve the competitiveness of the French economy.