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. Last Updated: 07/27/2016

Bank of France Marks Its 200th Anniversary




PARIS -- Born from the ashes of revolution, the Bank of France celebrates its 200th birthday Tuesday with a toast to its founder Napoleon and a touch of nostalgia for an era being swept away by Europe's single currency.


The bank, whose power to print money and set interest rates once had governments quavering, survived two centuries of war and upheaval to become the trusted guardian of the French franc.


But it will lose its original job of printing francs in 2002 when euro banknotes take over, and it ceded its right to set interest rates to the Frankfurt, Germany-based European Central Bank when the euro was launched in 1999. Created by Napoleon on Jan. 18, 1800, the Bank of France is one of Europe's oldest central banks after those of England and Sweden.


It could have been even older but for the excessive ambition of a banker of Scottish origin, John Law, who was granted rights to print banknotes in France nearly a century earlier.


The initial success of Law's adventure in 1716 went to his head, and he furiously printed bank bills to fund an expanding land and mining empire, only to find he could not honor the bills when his empire collapsed. He fled the country amid riots.


Napoleon, who hoped to pull France out of postrevolutionary recession, started up the bank as a joint stock firm.


He made it independent of government interference so that it would be solid enough to rebuild public trust in paper money, while printing banknotes to oil the wheels of trade and commerce and get the country moving again.


At the outset, its banknote activity was limited to Paris, and it took decades before to win wider, exclusive rights to print money that other governments had to accept as legal tender.


One of the fundamental tasks of modern central banks was bestowed on the Bank of France only in 1927 - authorization to intervene in foreign exchange markets to stabilize the currency.


Nationalization followed World War II, and then a series of devaluations that once again left French people wondering about the value of their banknotes.


Then in the early 1980s, the Napoleonic view of a solid currency to give France economic clout came back into fashion under the late President Fran?ois Mitterrand, who vowed to marry the franc to the powerful Deutsche mark in a single European currency.


That meant jacking up interest rates to keep the franc on a par with the mark, sometimes putting the bank in the firing line of governments aghast at the fallout on economic growth and rising unemployment among their electorate.


But at least for Bank of France chief Jean-Claude Trichet, the policy was vindicated, with a move first to fully fledged independence 1993, the creation of the European Central Bank in Frankfurt in 1998, and the euro's launch in January 1999.


It is the launch of the euro itself that is forcing the bank to fend off criticism that it no longer needs its 16,000 staff nor its nine-member Monetary Policy Council of highly paid monetary gurus.


The sumptuous headquarters bought from the Count of Toulouse in Paris in 1808 only serve to highlight its roots in the past.


Whatever the arguments over the golden era, Trichet is bent on celebrating his bank's bicentenary and making Paris a hotbed of central banking business in 2000.


He has invited the central bank chiefs of all the world's big economies to Paris for a conference in May.


The European Central Bank's governing council will head to Paris for a policy meeting in September and an informal gathering of central bankers from French-speaking countries is planned the same month.


A host of private sector events including annual meetings of ISMA securities traders and international currency traders is programmed for Paris in May and June.