Note 7 — Chapter II

Although the Bank of France only holds an important quantity of foreign bills (generally sterling), on exceptional occasions, e.g. at the beginning and end of 1907 and at the end of 1909, foreign paper enters very largely, through the agency of the great Crédit Banks, into the transactions of the French Money Market. These institutions take foreign bills into their own portfolios, and obtain the necessary funds by rediscounting inland bills at the Bank of France. Thus the French mechanism is much more closely analogous to the British than appears outwardly, and the influence of the Bank of France, like that of the Bank of England, is mainly indirect. The possibility of this is no doubt due to the fact that France, like Great Britain, is a creditor nation in the international short–loan market.