France

France initially tried exchange rate targeting within the Snake but turned to monetary targets, pursued via credit controls. Exchange rate targets returned with the establishment of the EMS, in addition. This pursuit of dual targets continued through the intensive financial innovation from the mid-1980s and the EMS upheavals of 1992-3, but while monetary targets continued to be set they became of little importance (or attainment) in the final years before EMU.

Years Targets and attainment Classification
1974-6 France left the Snake in January 1974, rejoined in July 1975 but left again in March 1976; more or less effective instruments (reliant on direct bank lending controls backed up by penalty reserve requirements) but objectives unclear loosely structured discretion LSD
1977-82 monetary targets more or less attained 5 years out of 6; some attention to exchange rate then membership of EMS from 1979 (with devaluations in 1979, 1981, 1982) monetary with exchange rate targeting MwERT
1983-86 monetary targets more or less attained; stronger commitment to exchange rate within harder EMS after March 1983 devaluation (further devaluation April 1986) monetary plus exchange rate targeting M&ERT
1987-92 monetary targets missed or nearly missed 3 years out of 6; solid exchange rate commitment in EMS after small devaluation January 1987; bank lending controls replaced as primary instrument of monetary policy by open market operations and interest rates, within wide-ranging programme of financial innovation and liberalisation exchange rate with monetary targeting ERwMT
1993-98 exchange rate moves beyond old EMS narrow bands in August 1993 but returns to them by early 1994 (within new formal EMS margins of 15%) and remains there apart from two small excursions in 1995; monetary targets still set but missed 4 years out of 6 full exchange rate targeting FERT
1999-2014 membership of European Monetary Union currency union CU

Selected IMF references: RED 1975 pp46-9; RED 1976 pp41-4, 52; RED 1981 pp42-6; SR 1983 pp5-7; RED 1986 pp61-3; RED 1987 pp72-6; RED 1988 pp53-6; SR 1988 pp11-12; RED 1989 pp26,32-3; RED 1996 pp31-4.

Additional sources: Houben (2000, especially pp206-8, 306-7); Cobham and Serre (1986); Gros and Thygesen (1998); Cobham, Cosci and Mattesini (2008).

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