Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

FRANCE

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of January 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Measures have been taken to freeze accounts of listed persons and entities linked to terrorists pursuant to the relevant EU regulations and UN Security Council resolutions.
Other security restrictionsIn accordance with EU regulations and the relevant UN Security Council resolutions, certain restrictions are maintained on the making of payments and transfers for current international transactions with respect to the Democratic Republic of the Congo, Côte d’Ivoire, the Islamic Republic of Iran, the former government of Iraq, the Democratic People’s Republic of Korea, the former government of Liberia, Myanmar, Sudan, certain individuals associated with the government of the former Federal Republic of Yugoslavia, and Zimbabwe. Financing of and financial assistance related to military activities in Somalia, Uzbekistan, and Sudan are prohibited. Restrictions also apply on transfers with respect to the Taliban and individuals and organizations associated with terrorism.
References to legal instruments and hyperlinkshttp://ec.europa.eu/external_relations/cfsp/sanctions/index.htm.
Exchange Arrangement
CurrencyThe currency of France is the euro.
Exchange rate structureUnitary.
Classification
Independently floatingFrance participates in a currency union with 12 other members of the EMU and has no separate legal tender. Effective January 1, 2007, the exchange arrangement of the EMU countries has been reclassified to the category independently floating from the category exchange arrangement with no separate legal tender. The new classification is based on the behavior of the common currency, whereas the previous classification was based on the lack of a separate legal tender. The new classification thus reflects only a definitional change, and is not based on a judgment that there has been a substantive change in the exchange regime or other policies of the currency union or its members. A fixed conversion rate of CFPF 1,000 per €8.38 applies to the CFP franc, which is the currency of the overseas territories of French Polynesia, New Caledonia, and Wallis and Futuna Islands. Two groups of African countries are linked to the French Treasury through an Operations Account: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo (franc de la Communauté financière africaine, issued by the BCEAO); and Cameroon, the Central African Republic, Chad, the Republic of Congo, Equatorial Guinea, and Gabon (franc de la Coopération financière en Afrique centrale, issued by the BEAC). The fixed parity is CFAF 655.957 per €1.
The Comorian franc, issued by the Central Bank of the Comoros, which holds an Operations Account with the French Treasury, is pegged to the euro at a fixed parity of CF 491.968 per €1.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketRegistered banks in France and Monaco, which may also act on behalf of banks established abroad or in Operations Account countries, are permitted to deal spot or forward in the exchange market in France. Registered banks may also deal spot or forward with their correspondents in foreign markets in all currencies. Nonbank residents may purchase foreign exchange forward with respect to specified transactions. All residents, including private persons, may purchase or sell foreign exchange forward without restriction. Forward sales of foreign currency are not restricted, whether or not they are for hedging purposes.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangementsNo.
Administration of controlThe Ministry of Economy, Finance, and Employment (MEFE) is the coordinating agency for financial relations with foreign countries. It is responsible for all matters relating to inward and outward direct investment and has certain powers over matters relating to insurance, reinsurance, annuities, etc. The execution of all transfers has been delegated to registered banks and stockbrokers and to the postal administration.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesAmounts exceeding the equivalent of €10,000 must be declared to customs on arrival or departure.
On imports
Foreign currencyAt the request of Algeria, Morocco, and Tunisia, banknotes issued by these countries may not be exchanged in France.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Licenses with quotasLicenses are required for some countries and some products. Imports of goods that originate outside of the EU and are subject to quantitative restrictions require individual licenses. Common EU regulations are also applied to imports from non-EU countries. Certain goods originating in the EU that are of a strategic nature or of national interest (e.g., works of art) are licensed.
Other nontariff measuresSome imports from non-EU countries require administrative visas issued by the Central Customs Administration or the appropriate ministry. Imports of products of the ECSC require such administrative visas when originating in non-ECSC countries. Products covered by the Common Market regulations require import certificates.
Import taxes and/or tariffsDuties are collected at the time of entry into the EU in relation to the origin of the products and a tariff nomenclature. An agricultural levy (within the CAP) and, if necessary, an antidumping levy may be added.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasCertain prohibited goods may be exported only under a special license.
Export taxesExports are not taxed, except for precious metals, works of art, jewelry, and collections of jewels and antiques, which are subject to a levy.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsControls apply to the purchase by non-EU residents of securities not quoted on a recognized securities market that may be affected by laws on inward direct investment and establishment.
On money market instruments
Sale or issue locally by nonresidentsControls apply to the issue of certificates of deposit by nonresident banks.
On collective investment securities
Sale or issue locally by nonresidentsControls apply to foreign collective investment securities, except for those that are of EC origin and comply with EC Directive 85/611/EC.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investmentDirect investments by companies not listed publicly are defined as those in which foreign investors together hold more than one-third of the capital. To determine whether a company is under foreign control, the MEFE may take into account any special relationships resulting from stock options, loans, patents, licenses, or commercial contracts.
Inward direct investmentAn authorization is required for investments in areas pertaining to public order, public security, and defense.
Controls on liquidation of direct investmentThe liquidation proceeds of foreign direct investment in France may be freely transferred abroad; the liquidation must be reported to the MEFE within 20 days of its occurrence. The liquidation of direct investments abroad is free from any prior application, provided the corresponding funds have been reported to the Bank of France.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsNo.
Provisions specific to institutional investors
Insurance companies
Currency-matching regulations on assets/liabilities compositionInsurance companies in the EU are required to cover their technical reserves with assets expressed in the same currency.
Pension fundsn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
No significant changes occurred in the exchange and trade system.
Changes during 2007
Exchange arrangementJanuary 1. The exchange arrangement of the EMU countries was reclassified to the category independently floating from the category exchange arrangement with no separate legal tender. The new classification reflects only a definitional change.

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