The governor of the Banque de France believes that two criteria must be met to be in a war economy: the “shift of the productive apparatus towards armaments industries” and “unconventional financing of these military expenses.”
The governor of the Banque de France, François Villeroy de Galhau, stated on Wednesday that France is not currently in a war economy, even though he acknowledged the European Central Bank’s increased attention to geostrategic factors.
“I believe that we are not in a war economy. We are facing an increase in defense spending, which is very different,” declared François Villeroy de Galhau at the Paris Forum for Defense and Strategy.
“I will venture to give a definition,” he said, outlining “two criteria” for a war economy: the first being “a shift of the productive apparatus towards armaments industries,” and the second being “unconventional financing of these military expenses – and, let’s be clear, we are printing money,” clarified the governor.
“When we look at Russia and Ukraine, they currently meet one of the two criteria, not necessarily the second,” stated the head of the French central bank.
He noted that the European Central Bank has been seeking more geopolitical expertise. “We are even more attentive. And you will be interested to know that in the past six months, we have already held two seminars with specialists in geopolitics and defense, with whom we have discussed within the governors council,” he detailed.
“This is my 11th year in this profession. In the first 10 years, we did not do this. But I believe it shows the importance for us to analyze, as openly and competently as possible, with the help of experts, our environment,” emphasized François Villeroy de Galhau. A “ministers’ meeting on the war economy” is scheduled for Thursday afternoon, according to a statement from Matignon on Wednesday.
Originally planned for March 16 and rescheduled, the Prime Minister intends to “provide a clear assessment of the three years of war economy initiated by France,” highlighting “progress” but that “this effort still needs to be intensified” in the face of the “rapid evolution of the international situation,” according to Matignon.
This meeting will also allow for the “precise evaluation of the capacity of industrialists to respond to additional orders planned within the framework of the update of the military programming law” envisaged in the spring, Matignon also explained.
