France

Research guide to European Monetary Union

France is one of the cornerstones of the EU and the drive towards monetary union: Emu without France is virtually inconceivable and we expect France to be a founding member of monetary union in 1999. In this article, we examine France's progress towards satisfying the Maastricht convergence criteria and focus on the French government bond market, which may well become the benchmark for the bond market in euros.

France, is preparing its economy for Emu, requiring tough fiscal policy at a time when the economy had slowed down considerably in late 1995/early 1996. The French commitment to achieving Emu membership in 1999 is very strong, even though France will be holding National Assembly elections in March 1998.

France's performance on the convergence criteria

Similarity in inflation performance is central to monetary union because otherwise one monetary policy would not suit all partner countries' needs. In underlying terms, a high degree of price stability has been achieved in France, including for private services, the most inflationary item (see Chart 1). We expect inflation to be at 1.5% in 1997. Low inflation, a current account surplus and an improving fiscal position means that France is also certain to satisfy the criteria on foreign exchange and bond yields.