Monetary policy in France: price incentives and quantitative controls

Abstract

The work looks at with the gradual revision of the methods of credit control in France during the late 1960s and 1970s. The implications of the change in the philosophy of credit control and the ensuing modification to the instruments of monetary policy are assessed by examining the monetary developments in recent years. The thesis proposed is that it is inefficient to rely exclusively on market-oriented controls in an open economy with an oligopolistic banking sector. Consequently, if the authorities want their policy measures to have rapid and perceptible impacts on banking activity then they are well-advised to use credit expansion limits, which run counter to the new philosophy. JEL: E52, E51

Keywords

• Monetary policy
• France
• credit controls