France’s Noyer Says BNP May Prompt Shift Away From Dollar

Bank of France Governor Christian Noyer said the U.S. investigation into BNP Paribas SA’s dealings with sanctioned nations may encourage companies to stop using dollars in international transactions.

“We could say that companies would have maximum interest to do the most possible transactions in other currencies,” Noyer, who is also a member of the European Central Bank’s Governing Council, said yesterday on BFM television. “Trade between China and Europe -- do it in euros, do it in renminbi, stop doing it in dollars. This is an affair that will leave marks.”

Noyer’s remarks are the strongest yet from French authorities protesting the size of the possible fine BNP Paribas may face in the matter. U.S. investigators are said to seek more than $10 billion in fines, a guilty plea and the suspension of dollar-clearing operations to settle the probe into France’s biggest bank’s dealing in countries including Iran and Sudan. As the world’s reserve currency, dollars are used internationally in trades of goods ranging from oil to airliners.

A suspension of BNP Paribas’s right to clear dollar trades might disrupt markets and hamper lending at a time when the ECB is trying to get more funding to the economy, Noyer said.

The threat suspension of ability to settle in dollars in the U.S. is “something that can put in danger the good functioning of the international financial system because BNP Paribas is a big player in this area,” Noyer said. “I hope if there are sanctions in this area, they are limited in a way that is not dangerous.”

A $10 billion fine could more than wipe out this year’s earnings for BNP Paribas, estimated at 5.64 billion euros ($7.6 billion) by analysts. It would also represent more than three times the combined fines paid by HSBC Holdings Plc, Standard Chartered Plc and ING Groep NV in 2012 for sanctions violations.

French President Francois Hollande and his finance and foreign ministers said last week that such a heavy fine for BNP Paribas may increase opposition to a free trade agreement being negotiated between the U.S. and the European Union.

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