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CFA franc
CFA franc (French: franc CFA, [fʁɑ̃ seɛfɑ]) is the name of two currencies used by 210 million people (as of 2023) in fourteen African countries: the West African CFA franc (where "CFA" stands for Communauté Financière Africaine, i.e. "African Financial Community" in English), used in eight West African countries, and the Central African CFA franc (where "CFA" stands for Coopération Financière en Afrique centrale, i.e. "Financial Cooperation in Central Africa" in English), used in six Central African countries. The ISO currency codes are XOF for the West African CFA franc and XAF for the Central African CFA franc. Although the two currencies are commonly called CFA franc and (currently) have the same value, they are not interchangeable. It is therefore not a common monetary zone but two juxtaposed zones.
Both CFA francs have a fixed exchange rate (peg) to the euro guaranteed by France: €1 = F.CFA 655.957 exactly. To ensure this convertibility guarantee, member countries were required to deposit half of their foreign exchange reserves with the French Treasury, but this requirement was dropped in 2019 (effective in 2021) for the West African CFA franc. This requirement remains unchanged for the Central African CFA franc, which wasn't reformed in 2019. These currencies have been criticized for restricting the sovereignty of the African member states, effectively putting their monetary policy in the hands of the European Central Bank. Others argue that countries using CFA franc are all equal and that CFA franc "helps stabilize the national currencies of Franc Zone member-countries and greatly facilitates the flow of exports and imports between France and the member-countries".
On 22 December 2019, it was announced that the West African currency would be reformed and replaced by an independent currency to be called Eco. In May 2020, the French National Assembly agreed to end the French engagement in the West African CFA franc, including the foreign reserve deposit requirements, thereby facilitating the transition to the Eco. Despite initial plans for a monetary union by late 2020, setbacks including the COVID-19 pandemic, global geopolitical uncertainties, and failure to meet criteria resulted postponements, with the fifth launch target date set for July 2027.
CFA francs are used in fourteen countries: twelve nations formerly ruled by France in West and Central Africa (excluding Guinea and Mauritania, which withdrew), plus Guinea-Bissau (a former Portuguese colony), and Equatorial Guinea (a former Spanish colony). These fourteen countries have a combined population of 210.4 million people (as of 2023), and a combined annual GDP of US$313.7 billion (as of 2023).
Between 1945 and 1958, CFA stood for Colonies françaises d'Afrique ("French colonies of Africa"); then for Communauté française d'Afrique ("French Community of Africa") between 1958 (establishment of the French Fifth Republic) and the independence of these African countries at the beginning of the 1960s. Since independence, CFA is taken to mean Communauté Financière Africaine (African Financial Community) or Coopération financière en Afrique centrale (see Institutions below).
The CFA franc was created on 26 December 1945, along with the CFP franc. The reason for their creation was the weakness of the French franc immediately after World War II. When France ratified the Bretton Woods Agreement in December 1945, the French franc was devalued in order to set a fixed exchange rate with the US dollar. New currencies were created in the French colonies to spare them the strong devaluation, thereby making it easier for them to import goods from France (and simultaneously making it harder for them to export goods to France). French officials presented the decision as an act of generosity. René Pleven, the French Minister of Finance, was quoted as saying:
In a show of her generosity and selflessness, metropolitan France, wishing not to impose on her far-away daughters the consequences of her own poverty, is setting different exchange rates for their currency.
The CFA franc was created with a fixed exchange rate versus the French franc. This exchange rate was changed only twice, in 1948 and in 1994 (besides nominal adaptation to the new French franc in 1960 and the Euro in 1999).
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CFA franc
CFA franc (French: franc CFA, [fʁɑ̃ seɛfɑ]) is the name of two currencies used by 210 million people (as of 2023) in fourteen African countries: the West African CFA franc (where "CFA" stands for Communauté Financière Africaine, i.e. "African Financial Community" in English), used in eight West African countries, and the Central African CFA franc (where "CFA" stands for Coopération Financière en Afrique centrale, i.e. "Financial Cooperation in Central Africa" in English), used in six Central African countries. The ISO currency codes are XOF for the West African CFA franc and XAF for the Central African CFA franc. Although the two currencies are commonly called CFA franc and (currently) have the same value, they are not interchangeable. It is therefore not a common monetary zone but two juxtaposed zones.
Both CFA francs have a fixed exchange rate (peg) to the euro guaranteed by France: €1 = F.CFA 655.957 exactly. To ensure this convertibility guarantee, member countries were required to deposit half of their foreign exchange reserves with the French Treasury, but this requirement was dropped in 2019 (effective in 2021) for the West African CFA franc. This requirement remains unchanged for the Central African CFA franc, which wasn't reformed in 2019. These currencies have been criticized for restricting the sovereignty of the African member states, effectively putting their monetary policy in the hands of the European Central Bank. Others argue that countries using CFA franc are all equal and that CFA franc "helps stabilize the national currencies of Franc Zone member-countries and greatly facilitates the flow of exports and imports between France and the member-countries".
On 22 December 2019, it was announced that the West African currency would be reformed and replaced by an independent currency to be called Eco. In May 2020, the French National Assembly agreed to end the French engagement in the West African CFA franc, including the foreign reserve deposit requirements, thereby facilitating the transition to the Eco. Despite initial plans for a monetary union by late 2020, setbacks including the COVID-19 pandemic, global geopolitical uncertainties, and failure to meet criteria resulted postponements, with the fifth launch target date set for July 2027.
CFA francs are used in fourteen countries: twelve nations formerly ruled by France in West and Central Africa (excluding Guinea and Mauritania, which withdrew), plus Guinea-Bissau (a former Portuguese colony), and Equatorial Guinea (a former Spanish colony). These fourteen countries have a combined population of 210.4 million people (as of 2023), and a combined annual GDP of US$313.7 billion (as of 2023).
Between 1945 and 1958, CFA stood for Colonies françaises d'Afrique ("French colonies of Africa"); then for Communauté française d'Afrique ("French Community of Africa") between 1958 (establishment of the French Fifth Republic) and the independence of these African countries at the beginning of the 1960s. Since independence, CFA is taken to mean Communauté Financière Africaine (African Financial Community) or Coopération financière en Afrique centrale (see Institutions below).
The CFA franc was created on 26 December 1945, along with the CFP franc. The reason for their creation was the weakness of the French franc immediately after World War II. When France ratified the Bretton Woods Agreement in December 1945, the French franc was devalued in order to set a fixed exchange rate with the US dollar. New currencies were created in the French colonies to spare them the strong devaluation, thereby making it easier for them to import goods from France (and simultaneously making it harder for them to export goods to France). French officials presented the decision as an act of generosity. René Pleven, the French Minister of Finance, was quoted as saying:
In a show of her generosity and selflessness, metropolitan France, wishing not to impose on her far-away daughters the consequences of her own poverty, is setting different exchange rates for their currency.
The CFA franc was created with a fixed exchange rate versus the French franc. This exchange rate was changed only twice, in 1948 and in 1994 (besides nominal adaptation to the new French franc in 1960 and the Euro in 1999).
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