Banque de Madagascar

The Banque de Madagascar, from 1946 the Banque de Madagascar et des Comores, was a bank established by the French government in 1925 to issue currency and provide credit in French Madagascar. As such, it fulfilled many of the functions of a central bank for the colony. Following the establishment of the Malagasy Protectorate, France took over direct administration of Madagascar as a colony in 1897. The Comptoir national d'escompte de Paris established a presence on the island in the late 19th century, and had advocated the creation of a local issuance bank as early as 1895. Until World War I, its only form of currency was coins of French francs. Franc banknotes were introduced during the war in substitution to the coin money, but did not satisfy the needs of Madagascar's colonial economy that would be better served by local money issuance. Parliamentary debates lingered in France for several years, as different models were considered including direct issuance by the French state, or the granting of an issuance privilege to a private-sector bank as had been done elsewhere with the Banque de l'Indochine in 1875 and the Banque de l'Afrique Occidentale in 1901. Legislation was eventually adopted on that created the Banque de Madagascar as a specialized issuance bank that would in practice be operated by the Banque de Paris et des Pays-Bas (BPPB), with which the French Finance Ministry and the colonial government of Madagascar had respectively signed agreements to that effect on . The bank's initial capital was held by the government of French Madagascar (20 percent), the BPPB (15 percent), the Comptoir national d'escompte de Paris (10 percent), various colonial economic interests in Madagascar (35 percent), and the inhabitants of Madagascar (20 percent) through a public subscription that was successfully conducted in March 1926. The French state had the power to name the bank's chairman and three other members of its board of directors. The governance adopted for the Banque de Madagascar represented a more hands-on approach of the French government than in previous comparable episodes.