The French government does not like crowdfunding

While most of the world is trying to move forward and away from the traditional banking sector, France tries its best to prevent financial innovation from annoying its politically-connected large banks. This is not welcome. But this follows a particular historical pattern. France has always been late in the race for financial innovation. This is originally due to the story of John Law and the Mississippi Company (later Compagnie d’Occident, later Compagnie Perpetuelle des Indes), which made anything financial-related suspicious and delayed the country’s financial development by around a 100 years.

Today, most countries, and in particular the US, the UK and emerging markets in Africa or Asia are trying to give a boost to the latest financial innovations around: crowdfunding, peer-to-peer lending, mobile banking… They hope that it would bolster lending to offset the effects of a depressed banking system (insolvency, regulation, regulation, regulation, regulation…).

Not in France. While BarcampBank (an ‘unconference’ for financial innovators) attendees have been talking about the difficulties of creating anything financial in France for a while, it recently looked like things were improving.

It looked too good to be true. The French government now wants to limit the amount invested to….. EUR250 per person per project. Yes. 250 euros. This is very likely to attract investors as you can guess… Projects will also be limited to EUR300k. It’s obviously not very big, especially in light of the projects available on some American and British platforms. The French government justifies this move by preventing individuals from taking on too much risk. Thank you dad.

Another, unofficial reason is that this type of financing will increasingly challenge banks’ savings and lending offers, probably within the next 15 years. French banks’ executives and French politicians are very connected: they often studied together, and many former civil servants work for French banks (and vice-versa). Crony capitalism is still the norm in the country.

Meanwhile, in the US, peer-to-peer lenders keep developing their business by now issuing securitisation…with the support of all large Wall Street banks. Another world, I’m telling you.

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