From technical to academic central banking: The scientization of the Banque de France | Finance and Society

The formation of a neutral place, 1966-1994

While initially Studies lagged behind the rest of the Bank in terms of staffing, from the 1960s onwards it started to grow more than proportionally to the total size of the Bank.Footnote 13 While the total staff of the BdF approximately quadrupled in volume between the 1930s and the late 1980s, Studies increased their staff by 12 times. Before 1960, the total staff quadrupled in volume, and the staff of Studies followed suit. After this date, it can be considered that there was a substantial increase in the proportion of staff assigned to the Studies. Therefore, it must be concluded that part of this growth was due to a strategic choice.

The newly appointed Deputy Governor André De Lattre, a former ‘inspecteur des finances’, technical adviser to the General Secretariat of the Presidency of the Republic and then head of Wilfrid Baumgartner’s cabinet, arrived in July 1966. He had a strong will to ‘modernize and open up the Banque de France’.Footnote 14 To modernize the BdF meant, for De Lattre, introducing cutting-edge techniques. To ‘open up’ meant developing relations with the outside world, in particular with academia. These relations should be developed, according to him, mainly through joint symposiums between the BdF and academia. The BdF implemented several policies seeking to establish regular relationships with the academic field.

From September 1966, a first ‘information symposium’ inviting academics was planned in the Golden Hall, according to the wishes of Deputy Governor De Lattre. De Lattre had invited ‘old university friends’, such as Paul Coulbois, a full professor of political economy at Sorbonne University, Jean Mérigot, a full professor at the Institut d’études politiques in Bordeaux, and Jean-Louis Guglielmi, a full professor at Sorbonne University, via a written invitation.Footnote 15 Most of the academics were very enthusiastic about this event – ‘such an initiative is too exciting for me as an academic to neglect’ one wroteFootnote 16 – hoping that it would lift some of the secrecy on monetary issues and build bridges between practical and theoretical knowledge:

The Information Symposium on liquidity problems (‘Colloque d’information sur les problèmes de liquidité’) was held between 10-12 October 1966 in the presence of renowned economists such as the highly influential economist and statesman Raymond Barre,Footnote 18 Emile James, a full professor at the Ecole des Hautes études Commerciales and elected member of the Académie des sciences morales et politiques, and Pierre Tabatoni, a university professor in economics at Paris-Dauphine University, as well as young economists such as the development economist Sylviane Guillaumont-Jeanneney and Jacques Le Bourva, a professor of economics at Rennes University. André De Lattre introduced the symposium immediately saying his wish to initiate a series of recurrent meetings and proposed that another symposium be organized in 1968.Footnote 19 A second symposium was organized in 1969 on ‘balance of payments problems’,Footnote 20 bringing together the same guests as in 1966, and a few other personalities such as Bernard Lassudrie-Duchêne, a professor at Sorbonne University and a well-known specialist in international economics, or Alain Barrere, a professor at Sorbonne University and one of the main introducers of Keynesianism in France. Seven employees of the Ministry of Finance, and Olivier Wormser, Governor of the BdF, also attended the symposium and were received in the Golden Gallery (‘Galerie Dorée’). The following year, a third symposium was held on ‘Quasi-Money’; then in 1975 on ‘The problem of financing investments’, where the same regulars were present. Also present was the eminent Jacques Rueff (very influential in French economic policies from the 1920s to the 1970s), members of financial and banking organizations, André De Lattre (President of the Crédit National),Footnote 21 and Claude Gruson (member of the management board of the Compagnie Bancaire and former Director General at INSEE), employees of the Ministry of Finance, and members of the Commissariat Général au Plan, in addition to participants from the BdF, including two deputy governors. It is therefore clear that these symposiums were increasingly becoming ‘neutral places’ (Bourdieu and Boltanski, Reference Bourdieu and Boltanski1976), gathering actors belonging to the various fractions of the field of power (political field, administrative field, academic field, economic and financial field, etc.). ‘The dominant concerns of the last 20 or 25 years’ were discussed there, according to Deputy Governor De La Geniere.Footnote 22 As early as 1974, staff members stated: ‘in the context of its relations with the university – which it has endeavoured to develop over the past few years – the Banque de France has organised regular symposiums with professors of economics. […] In this way, a tradition was established, which is still fragile, and which should be consolidated’.Footnote 23 The aim of these conferences was not so much for the BdF to learn from academics as to disseminate information. Scholars were indeed only invited as audience, while the presentations were made by the staff of the Direction Générale.

During this period, the role of the Direction Générale evolved considerably. From 1968 onward, it regained its independence from the General Directorate of Credit, although the two continued to collaborate regularly. The centrality of the Studies was further reinforced by the law of 2 January 1973, which gave the BdF the mission of ‘carrying out all studies and analyses useful for its information or that of the public authorities’. The new Statutes of 1973 changed the composition of the BdF’s General Council, replacing ‘members by right’ representing economic sectors with experts appointed for their ‘economic competency’ (Monnet, Reference Monnet2018: 94). The Director of Studies, F. Moliexe, emphasized in May 1973, that while the Direction had in the past ‘the broadest possible vocation for research and information’ but had refrained from participating in academic discussions, ‘the increasing multiplicity and complexity of economic phenomena […] as well as changes in the organization of the Bank of issue have imposed, over the last twenty years, profound changes in the role and character of the Studies Department’.Footnote 24 In 1973, the composition of the BdF’s General Council (‘Conseil Général de la BdF’) was modified in order to integrate ‘experts’ chosen for their economic skills: Raymond Barre and Edmond Malinvaud, a world renowned economist at INSEE and former director of the Direction de la Prévision at the Ministry of the Economy from 1972 to 1974. It is likely that Malinvaud contributed to bridging connections between the BdF, INSEE, and the Direction de la Prévision, and to establishing these two institutions as a model for the future of Studies at the BdF. In 1976, the Roquetaille project took note of this evolution by merging the General Directorate of Studies and the General Directorate of the Economic Conditions (‘Direction Générale de la Conjoncture’). New ‘strategic choices’ were made, ‘in response to the concerns expressed by the Joint Standing Committee’.Footnote 25 These choices were made in favor of a deepening and diversification of work, a ‘significant increase in studies intended to inform the Bank’s authorities’, but above all to give priority to ‘fundamental research’ and ‘original research and synthesis work’.Footnote 26

This evolution can also be explained by the competition with other bodies of the administrative field both at the national and international levels. Indeed, the report of the joint standing committee’s synthesis group on the activities of the Direction Générale in 1975 emphasized the inadequacy of the resources and training of economists to reach a level ‘comparable to that of economists in other central banks’ and called for the development of a Research Department ‘in order to enable the Bank to maintain the important position it holds in this field in comparison with other administrations’.Footnote 27 Similarly, in an update on the role and operating conditions of the Direction Générale at a meeting of the Executive Committee, Pierre Berger, the new Director General of Studies, recalled that ‘in certain cases, […] the Bank finds itself in a position of competition with certain government departments such as the Direction de la Prévision or the INSEE’. Berger thus recommended to ‘try to impose [them]selves through the quality and originality of the work [they] provide’.Footnote 28 For its part, the Joint Standing Committee recommended deepening relations with academics, criticized the overly ‘immediate’ aspect of the Direction Générale’s work and calls for the creation of a forecasting unit. It encouraged the broadening of the Bank’s areas of study as well as the conduct of ‘pure’ research: ‘Generally speaking, it is important for the Bank to give itself the means to assert itself in these areas through the scope and quality of its studies and thus be in a position to respond to its own needs and those of the public authorities, as well as to the requests it receives, particularly from the university and international organizations’.Footnote 29

As a result, forms of cooperation between the BdF and universities developed on both sides. On the BdF’s side, academics were invited to give presentations in BdF symposiums. The practice of hosting student interns also became more widespread from 1977 onwards, especially during the Summer months.Footnote 30 From 1979 onwards, the Bank’s government implemented a policy of financial support for researchers, university professors, and students.Footnote 31 That same year, Christian De Boissieu, an economist at Sciences Po who occupied multiple positions in national and international economic institutions, was the first to receive a grant of 10,000 francs for a research project on the ‘structure and formation of interest rates’.Footnote 32 Progressively, the BdF entered the burgeoning landscape of macroeconomic forecasting units in France (Angeletti, Reference Angeletti2021), an area that was previously reserved to the Treasury’s Direction de la Prévision and the INSEE. From 1979 onwards, members of the Direction Générale’s staff participated in the G.A.M.A. project to set up an econometric model in collaboration with the CNRS and University Paris X-Nanterre. This conversion to fundamental research led, in 1990, to the creation, by the new Director of Studies, Yves Barroux, of a Research Center ‘widely open to the outside world’. The twelfth BdF-University symposium organized that year brought together more prestigious personalities than ever before, such as Tommaso Padoa-Schioppa, Charles Goodhart, Jean Tirole, Philippe Aghion, Michel Aglietta, as well as Marc-Olivier Strauss Kahn and Dominique Plihon who were both employees of the Direction Générale and thus testified to the successful marriage between the BdF and academia. A Centre d’Etudes Supérieures de la Banque (Centre for Advanced Studies) was created to provide university training for the Bank’s staff. On the other side, institutions such as University of Paris 1 solicited the Bank’s agents to participate in their training.Footnote 33 Robert Raymond for instance, a future Director General of Studies from 1983 onward, began to give lectures at the SorbonneFootnote 34 and André De Lattre taught economic policies at Science Po between 1959 and 1983. A member of the Business Conditions Division and then Director of Research from 1990 onwards, recalled a ‘cross-fertilization’ allowing universities to ‘better understand, sometimes to come and work, to obtain statistical series that they didn’t even know existed, and to improve their work’.Footnote 35

The Direction Générale became a neutral place in the sense that it became a meeting point between all fractions of the field of power and a place of production of the dominant economic ideology. All the different field effects mentioned before thus played a role. One department in particular was to play a catalytic role in this dynamic: the Econometric Studies and Research Bureau (‘Service d’Etudes Econométriques et de Recherche’), set up in 1969. Introducing econometric research at the BdF, the department elaborated on the BdF’s own model of analysis of the French economy in 1975. Moreover, the BdF model constituted an original synthesis between monetarism and Keynesianism, based on the hypothesis of an ‘overdraft economy’ (Hicks, Reference Hicks1967), which was to become a school of thought in France during the 1980s (Feiertag, Reference Feiertag and Feiertag2005a: 238; see also Renversez, Reference Renversez2008).

The Direction Générale was increasingly perceived as ‘emissary of the Bank’ or spokesperson, not only to the public but also to the BdF’s international counterparts. In a note circulated on 22 October 1973,Footnote 36 P. Berger emphasized that the Direction Générale must play a very active role in disseminating information to different audiences, in particular the actors providing data (financial institutions, companies, and exporters), the universities, professors, and students, who must receive ‘direct information on the evolution of the economic situation’, but also ‘[the Bank’s] own conceptions on the interpretation of the phenomena’, and the press. The Econometric Studies and Research Bureau was thus supposed to play a role in disseminating econometric analyses and scientific communication through the publication of the Cahiers économiques et monétaires, starting in 1974 (Table 2). Berger also stressed that the work conducted by the BdF cannot be identical to academic research: BdF staff must above all maintain relations with the outside world, and actively bring a point of view, namely that of the Bank. In another note in 1970, Berger writes that ‘like the previous symposiums, the latest one confirms that the positive contribution is greater on the part of the Banque de France than on the part of the professors, whose theoretical views are not always of a nature to provide useful elements for the conduct of monetary policy. This does not mean that such meetings are useless, on the contrary, but that they should be considered above all as a profitable contribution by the Banque de France to university teaching’.Footnote 37 As a former Director of Studies put it, the aim was to fill a ‘lack of knowledge about the reality of monetary phenomena’ and ‘to ensure that academics no longer talk nonsense about monetary issues’.

If the BdF takes on important tasks of disseminating economic information, it is because it considers that this can increase the effectiveness of monetary policy, as the Governor explained to the Minister of the Economy: ‘I am convinced that a better knowledge by experts and the general public of monetary and financial phenomena and of the consequences implied by the choice of policies can only lead to a better understanding and therefore to a more effective action of the monetary authorities’.Footnote 38 Therefore, it becomes clear that the new connections built with academia and the contribution of the BdF to academic debates aim at building symbolic state capacities through the monopoly of the judgment of truth claims.

The Banque de France within the European System of Central Banks

From the 1990s onward, following the acceleration of the European economic and monetary integration process, the BdF became both legally independent from the French government and integrated within the European System of Central Banks (ESCB). This entailed two changes. First, the new stakes for the BdF action consisted in making its voice heard in the decision-making process at the European level. Second, formal independence meant that the BdF, like all other ESCB central banks, could no longer base its legitimacy on that of a democratically elected government, and therefore had to find other sources of legitimacy and authority. Following the lead of the European Central Bank (ECB), the BdF sought political legitimacy by adopting the formal norms of academic legitimacy.

As Mudge and Vauchez (Reference Mudge and Vauchez2016) showed, the ECB is an institution that has been seeking academic legitimacy since its inception, notably through a Directorate General specifically devoted to research, whose main aim has been to publish articles in leading academic journals. As this former member of the ECB’s Executive Board put it, in an interview I conducted in 2021, this strategy is ‘a bit of a show-off’ and aims at endowing the ECB with significant scientific prestige. This strategy also allowed the ECB to establish itself both in the face of European national central banks whose scientific legitimacy was still largely to be built and in the face of the American Federal Reserve. As a former staff member of the BdF’s Research Centre put it, ‘the aim of the ECB was to impose itself in a world where the other central banks all looked down on it. […] It was an opportunity for the people who were there who said to themselves ‘well, there’s an opening to gain market shares, perhaps in the long term to make our work visible’’.

The rise of this new dominant player in the field has led to a major rethinking at the BdF, which found itself in competition with the other national central banks in an area where it was rather behind. Indeed, long integrated into the French administrative field, it recruited its staff based on very different criteria from those of other national central banks and soon of the ECB – in particular, very few staff with a PhD – and therefore had great difficulty in seconding its staff to the ECB.

This new situation led the BdF to review its strategy, imitating the new forms of academic legitimacy set by the ECB. Three initiatives are most representative of this new endeavor. In 1990, the BdF created its own Research Center, overviewed by a prestigious scientific committee: Jacob Frenkel (then chief economist at the IMF), Edmond Malinvaud, Patrick Artus, and Christian de Boissieu among others.Footnote 39 In 1995, the ‘Banque de France Foundation’ was established, with the mission to fund economic research and to ‘work for better synergy between the research community and the Banque de France’.Footnote 40 Since 1997, this foundation has awarded several research grants.

Furthermore, since 2001, the Foundation has also been sponsoring a PhD dissertation prize hosted by the French economics association (‘Association Française de Sciences Economiques’) as well as a ‘Young Researcher’s Prize’ (since 2008). Finally, the BdF set up, in 2004, a visiting program allowing French and foreign academics to apply for one- to three-week stays at the BdF, with travel and accommodation expenses covered. More occasionally, the BdF also financed research projects or university conferences. According to a former staff member of the Research Center, all these initiatives were ‘a way of making the BdF visible and giving the impression that the BdF was in the picture in international terms, so the idea was to invite (…) famous people to say, ‘the Banque de France exists like other central banks.’ Understanding the need for economists with PhD credentials, the Research Center was happy to send some of its employees do a PhD in the United States.Footnote 41

Following these initiatives, which started in the 1990s and early 2000s, the BdF experienced, starting from the mid-2000s, a strong expansion of its research profile. As a former research executive reports, the strategic reorientation of the BdF in the 2000s led to an unprecedented massive hiring of researchers and PhDs: ‘It’s a strategic choice that was made. And the strategic choice was to make research more dynamic, to say that it was imperative to exist in the field of research. It’s a huge choice, so there was a lot of hiring and the standard hiring flow was much more oriented towards research, research was much more valued internally, so here we changed gear. We’ve changed gear, it’s a huge thing! Huge. Huge’.Footnote 42 According to another witness at the time, this ‘change of gear’ was carried out according to the will of the newly appointed deputy governor in 2005, Jean-Pierre Landau, who alongside his career as a senior civil servant taught economics at Science Po Paris, Johns-Hopkins University, and Princeton University.

Regarding academic publications, the BdF has been catching up with other central banks since 2005. In the 2010s it reached the same quantitative level of publications in academic journals as the Bank of England or the Federal Reserve of Saint Louis.Footnote 43 As a former executive of research at the BdF explained, before the 2000s some of the staff had been publishing books or articles, but most of the time they did it using an alias, and without claiming a direct affiliation with the BdF.

This new strategy by the BdF, which marks the final step of its academization, was motivated by the need to influence the European field of central banks and the bodies responsible for monetary decisions in a context where the new dominant player, the ECB, had imposed scientific prestige as a new criterion of legitimacy.