History of the French banking system
French bank accounts and the system that created them can trace its roots back to the creation of the Banque de France. Created by Napoleon I in 1880, it was initially a private bank of which Napoleon himself was a shareholder. Its methods followed those of the Bank of Sweden in that precious metals were deposited at the bank in exchange for notes. The high value notes were intended for circulation to affect regulation of monitory movement and although they were convertible into gold at the bank they were not deemed legal tender as no one was obliged to accept them for payment of goods or services.
It wasn’t until 1850 that the French government obliged all to accept the notes in payment, the changes forced by the economical and social crisis of 1848. The practice of exchanging notes for gold desisted and in 1870 the use of notes was again proclaimed by the government. There was to follow a re-establishment in 1878 if the exchange of notes for gold but the notes role of legal tender as now finally introduced. The Bank of France forced the issue of legal tender bank notes in 1936 and continues to this day.
Although the use of the bank note rose steadily its reference to the price of gold continued for many years. One of the last references to gold was in 1959 with the issue of the new French Franc, equivalent to 100 old Francs and 180mg of gold, finally ceasing in 1969 with the forced devaluation of the new French Franc to 160mg of gold. Since then all currency has stood on its own ground, removing all references to its gold equivalent and in 1976 when the Franc was officially demonetized during the Kingston agreement, all references to gold became prohibited.
Gold may have lost its importance in valuing currency and, bank vaults may be lighter as a result of trading their reserves but, many still hold a substantial tonnage, for France amounting to approximately 2,800 tonnes. Adding together all the gold stored by the central banks of the world would come to around 32,000 tonnes, a substantial amount compared to the 150,000 tonnes estimated to have been mined by man, 10,000 of which has been lost over the ages. Gold is therefore still an important financial reserve for the banks of the world even if it’s value is no longer directly related to a county’s currency.
During the late 20th century many new methods of currency use has materialised. From the growth in use of the cheque to the introduction of bank cards and now a brief swipe of a smart phone, currency is fast becoming materialised. Banks now longer trade in hard physical currency, it now only exists in electronic devices and hard drives.
At the heart of the French banking system is the central bank, the Banque de France. Privately created in 1800, it was nationalised in 1945, became independent in 1993 and since 2000 and the introduction of the Euro, has been working in a close relationship with the European Central Bank.
What do I need to open a French bank account?
It is very important that any foreigner wanting to purchase a property in France should think about opening a French bank account as soon as possible, or when you have at least decided on the area you want to live in. Settling household bills is mostly carried out by direct debit, standing orders or cheques, and to do this from an account outside France would be a constant concern regarding currency exchange and bank charges. Below is a list of the most likely pieces of paperwork you’ll need to present to a bank in order to open an account. French bank accounts can differ from bank to bank in what they demand, if you bring all the pieces in the lists below you should be able to cover all eventualities.
Opening French bank accounts in person
- Valid passport
- A recent services/utility bill (not more than a few months old) to prove the address of your main residence
- Copy of the last couple of months bank statements or a bank reference.
- Proof of income (if there are to be regular payments from the account some banks require proof of regular income), or your last P60, or a self-assessment
- Birth certificate
- A copy of a recent utilty (electricity, gas, water or telephone) bill with your name and address on it
Opening French bank accounts at a distance
- Certified (police, lawyer, mayor, or someone of authority or position) copies if 2 pieces of identity (passport, driving licence, National ID card) showing a photo of the applicant
- Copies of 2 utility (electricity, gas, water or telephone) bills from your home address with your name and address on
- A copy of your last P60 or self-assessment
- Copies of your last 3 pay slips or other proof of income
- A letter of reference from your current bank
- A cheque from your current bank (crossed and void)
- Copies of your last 3 bank statements relating to the same account the cheque is from
Overdrafts in the UK are common and are not usually penalised if quickly remedied, more often incurring the cost of a letter to inform you of the situation. In France however, banks can now accept that accounts can run in the negative but authorisation to do so is paramount, it is not automatic and failure to rectify immediately can incur stiff penalties. A request for an overdraft can be made in person at the bank and concludes with the account holder’s signature on a contract or can be request in writing by post.
An overdraft can be authorised as a one off event with fixed start and end dates or it may be granted for an indefinite period (until the contract is either revised or terminated). The time period of an overdraft can be anything up to 3 months, but never more. During the agreed period the account must be in credit for at least one full day. If an overdraft of more than 200€ exceeds 90 consecutive days it is automatically referred to a consumer credit contract. Consumer credit contracts relate to loans other than real estate and can be between 200€ and 75,000€ with a repayment term of over 3 months.
Beware, overdrafts in France can accumulate many costs. For each overdraft facility you make with the bank, they can draw from your account costs for services rendered – the Agios. These include interest incurred, miscellaneous expenses and commissions. Most banks do however charge a flat fee for an overdraft regardless of the amount or duration, this is called a Agios Forfaitaires. But beware, others are arranged with a Agios proportionnels with varying rates.