The Conversion of France to Financial Liberalism

Michel CASTEL * Ancien directeur, Banque de France ; ancien chargé de cours en Master 2 banque, finance, assurance, Université de Paris X Nanterre. Contact : michelcastel@gmail.com.

How did France switch to a policy of monetarist inspiration only two years after the election of President Mitterrand in 1981, elected on a left-wing program? Two main types of reasons led her to make this switch. The first is common to all OECD countries from 1973, the second is specific to France.

In addition to a very serious deterioration in the economic situation throughout the OECD, there has been the observation of the growing ineffectiveness of Keynesian policies and the idea that monetarist policies would be more effective. For its part, France had, more than others, sacrificed to a debt economy with ever more inflation and unemployment.

Furthermore, in 1981, France economic policy was at the opposite of the international economic situation and the monetarist policies developed in the Anglo-Saxon countries. This, plus the commitment to sharply lowering inflation, very quickly led her to choose a policy of monetarist inspiration.