France hits out at dollar dominance in international transactions

Michael Stothard
France slams dollar dominance

France's political and business establishment has hit out against the hegemony of the dollar in international transactions after U.S. authorities fined BNP Paribas $9 billion for helping countries avoid sanctions.

Michel Sapin, the French finance minister, called for a "rebalancing" of the currencies used for global payments, saying the BNP Paribas case should "make us realize the necessity of using a variety of currencies".

He said, in an interview with the Financial Times on the sidelines of a weekend economics conference: "We [Europeans] are selling to ourselves in dollars, for instance when we sell planes. Is that necessary? I don't think so. I think a rebalancing is possible and necessary, not just regarding the euro but also for the big currencies of the emerging countries, which account for more and more of global trade."

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Christophe de Margerie, the chief executive of Total, France's biggest company by market capitalization, said he saw no reason for oil purchases to be made in dollars, even if the benchmark price in dollars was likely to remain.

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"The price of a barrel of oil is quoted in dollars," he said. "A refinery can take that price and using the exchange rate on any given day, agree to make the payment in euros."

One chief executive of a CAC 40 industrial group said he supported Mr Sapin's push.

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"Companies like ours are in a bind because we sell a lot in dollars but we do not always want to deal with all the US rules and regulations," he said.

The uproar over the BNP fine at the usually sedate Cercle des Economistes conference in Aix-en-Provence highlighted what has become yet another friction point in transatlantic relations.

French officials lobbied heavily on behalf of the country's largest bank and argued that BNP broke no European rules, prompting a debate about whether it had been the victim of U.S. judicial over-reach.

Mr Sapin said he would raise the need for a weightier alternative to the dollar with fellow eurozone finance ministers when they meet in Brussels on Monday, although he declined to go into detail about what practical steps might emerge.

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More than half of cross-border loans and deposits are transacted in dollars and in the last global survey of the $5 trillion a day foreign exchange market, the dollar was on one side of 87 per cent of all trades. Despite efforts to diversify, many central banks say that they still see no real alternative to the safety and liquidity of the U.S. Treasury market, and hold more than 60 per cent of their reserves in dollars.

A senior French official cast doubt on the government's ability to stimulate the further use of the euro in international trade: "In the end it is hard to know what they can really do. The market really decides these things."

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Mr Sapin on Sunday reiterated comments made last week that the French government was willing to sell some of the €100 billion of corporate shareholdings, taking more of an "active management" over its stakes.

He declined to comment on the scale or pace of the sales but said the money would be used "for reducing the debt, for helping to finance our economy, the energy transition and housing".

When asked about the possible return to politics of former French president Nicolas Sarkozy, Mr Sapin said: "That's his business, that's his choice and that of his friends. What is clear to me though is that Nicolas Sarkozy has really not changed."

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His comments followed Mr Sarkozy's detention last week for questioning by an anti-corruption court, which prompted the former UMP leader to make a formal televised riposte.