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 the 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 even while the economy slowed down considerably in late 1995 and early 1996. The French commitment to achieving Emu in 1999 is very strong, and should not be disturbed by the fact that France will be holding National Assembly elections by spring 1998 at the latest.
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 (see Chart 1), and we expect that the 1.7% inflation figure will decline next year.
