HOME

TheInfoList



OR:

The CFA franc (french: franc CFA, , Franc of the Financial Community of Africa, originally Franc of the French Colonies in Africa, or colloquially ; abbreviation: F.CFA) is the name of two
currencies A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...
, the
West African CFA franc The West African CFA franc ( French: ''franc CFA'' or simply ''franc'', ISO 4217 code: XOF; abbreviation: F.CFA) is the currency used by eight independent states in West Africa which make up the West African Economic and Monetary Union (UEMOA; ...
, used in eight West African
countries A country is a distinct part of the world, such as a state, nation, or other political entity. It may be a sovereign state or make up one part of a larger state. For example, the country of Japan is an independent, sovereign state, while th ...
, and the Central African CFA franc, used in six
Central Africa Central Africa is a subregion of the African continent comprising various countries according to different definitions. Angola, Burundi, the Central African Republic, Chad, the Democratic Republic of the Congo, the Republic of the Congo, ...
n countries. Although separate, the two CFA franc currencies have always been at parity and are effectively interchangeable. The ISO currency codes are XAF for the Central African CFA franc and XOF for the
West African CFA franc The West African CFA franc ( French: ''franc CFA'' or simply ''franc'', ISO 4217 code: XOF; abbreviation: F.CFA) is the currency used by eight independent states in West Africa which make up the West African Economic and Monetary Union (UEMOA; ...
. 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. Both CFA francs have a fixed exchange rate to the euro: 100 CFA francs = 1 
French franc The franc (, ; sign: F or Fr), also commonly distinguished as the (FF), was a currency of France. Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money. It wa ...
= €0.152449; or €1 = F 6.55957 = F.CFA 655.957 exactly.


Usage

CFA francs are used in fourteen countries: twelve nations formerly ruled by France in West and
Central Africa Central Africa is a subregion of the African continent comprising various countries according to different definitions. Angola, Burundi, the Central African Republic, Chad, the Democratic Republic of the Congo, the Republic of the Congo, ...
(excluding Guinea and Mauritania, which withdrew), plus
Guinea-Bissau Guinea-Bissau ( ; pt, Guiné-Bissau; ff, italic=no, 𞤘𞤭𞤲𞤫 𞤄𞤭𞤧𞤢𞥄𞤱𞤮, Gine-Bisaawo, script=Adlm; Mandinka: ''Gine-Bisawo''), officially the Republic of Guinea-Bissau ( pt, República da Guiné-Bissau, links=no ) ...
(a former
Portuguese Portuguese may refer to: * anything of, from, or related to the country and nation of Portugal ** Portuguese cuisine, traditional foods ** Portuguese language, a Romance language *** Portuguese dialects, variants of the Portuguese language ** Portu ...
colony), and
Equatorial Guinea Equatorial Guinea ( es, Guinea Ecuatorial; french: Guinée équatoriale; pt, Guiné Equatorial), officially the Republic of Equatorial Guinea ( es, link=no, República de Guinea Ecuatorial, french: link=no, République de Guinée équatoria ...
(a former
Spanish Spanish might refer to: * Items from or related to Spain: **Spaniards are a nation and ethnic group indigenous to Spain **Spanish language, spoken in Spain and many Latin American countries **Spanish cuisine Other places * Spanish, Ontario, Can ...
colony). These fourteen countries have a combined population of 193.1 million people (as of 2021), and a combined GDP of US$283.0 billion (as of 2021).


Evaluation

The currency has been criticized for making economic planning for the developing countries of French West Africa all but impossible since the CFA's value is pegged to the euro (whose monetary policy is set by the European Central Bank). Others disagree and argue that the CFA "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". The European Union's own assessment of the CFA's link to the euro, carried out in 2008, noted that "benefits from economic integration within each of the two monetary unions of the CFA franc zone, and even more so between them, remained remarkably low" but that "the peg to the
French franc The franc (, ; sign: F or Fr), also commonly distinguished as the (FF), was a currency of France. Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money. It wa ...
and, since 1999, to the euro as exchange rate anchor is usually found to have had favourable effects in the region in terms of macroeconomic stability".


Name

Between 1945 and 1958, CFA stood for ("French colonies of Africa"); then for (" 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 (African Financial Community), but in actual use, the term can have two meanings (see
Institutions Institutions are humanly devised structures of rules and norms that shape and constrain individual behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions a ...
below).


History


Creation

The CFA franc was created on 26 December 1945, along with the
CFP franc The CFP franc ( French: , called the ''franc'' in everyday use) is the currency used in the French overseas collectivities (, or COM) of French Polynesia, New Caledonia, and Wallis and Futuna. The initials ''CFP'' originally stood for ('Frenc ...
. The reason for their creation was the weakness of the
French franc The franc (, ; sign: F or Fr), also commonly distinguished as the (FF), was a currency of France. Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money. It wa ...
immediately after World War II. When France ratified the
Bretton Woods Agreement The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bret ...
in December 1945, the
French franc The franc (, ; sign: F or Fr), also commonly distinguished as the (FF), was a currency of France. Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money. It wa ...
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 René Pleven (; 15 April 1901 – 13 January 1993) was a notable French politician of the Fourth Republic. A member of the Free French, he helped found the Democratic and Socialist Union of the Resistance (UDSR), a political party that was mean ...
, the French Minister of Finance, was quoted as saying:


Exchange rate

The CFA franc was created with a fixed exchange rate versus the
French franc The franc (, ; sign: F or Fr), also commonly distinguished as the (FF), was a currency of France. Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money. It wa ...
. 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). Exchange rate: * 26 December 1945 to 16 October 1948 – F.CFA 1 = 1.70 French franc. This 70 centime
premium Premium may refer to: Marketing * Premium (marketing), a promotional item that can be received for a small fee when redeeming proofs of purchase that come with or on retail products * Premium segment, high-price brands or services in marketing, ...
is the consequence of the creation of the CFA franc, which spared the French African colonies the devaluation of December 1945 (before December 1945, 1 local franc in these colonies was worth 1 French franc). * 17 October 1948 to 31 December 1959 – F.CFA 1 = 2 French francs (the CFA franc had followed the French franc's devaluation versus the US dollar in January 1948, but on 18 October 1948, the French franc devalued again and this time the CFA franc was revalued against the French franc to offset almost all of this new devaluation of the French franc; after October 1948, the CFA followed all the successive devaluations of the French franc) * 1 January 1960 to 11 January 1994– F.CFA 1 = NF 0.02 (1 January 1960: the French franc redenominated, with 100 old francs becoming 1 new franc) * 12 January 1994 to 31 December 1998– F.CFA 1 = F 0.01. An overnight 50% devaluation. * 1 January 1999 onwards – F.CFA 100 = €0.152449 or €1 euro = F.CFA 655.957. (1 January 1999: the euro replaced FRF at the rate of 6.55957 FRF for 1 euro) The 1960 and 1999 events merely reflect changes of currency in use in France: the actual relative value of the CFA franc versus the French franc/euro only changed in 1948 and 1994.


Changes in countries using the franc

Over time, the number of countries and territories using the CFA franc has changed as some countries began introducing their own separate currencies. A couple of nations in West Africa have also chosen to adopt the CFA franc since its introduction, despite the fact that they had never been French colonies. * 1960: Guinea leaves and begins issuing
Guinean franc The Guinean franc (french: franc guinéen, ISO 4217 code: ''GNF'') is the currency of Guinea. It is subdivided into one hundred ''centimes'', but no centime denominations were ever issued. History First Guinean franc The first Guinean franc was ...
s. * 1962: Mali leaves and begins issuing
Malian franc The Malian franc was the independent currency of Mali between 1962 and 1984. Although technically subdivided into 100 ''centimes'', no subdivisions were issued. History Until 1962, Mali used the West African CFA franc. The Malian franc was introd ...
s. * 1973: Madagascar leaves (in 1972, according to another source) and begins issuing its own francs, the Malagasy franc, which ran concurrently with the
Malagasy ariary The ariary ( sign: Ar; ISO 4217 code MGA) is the currency of Madagascar. It is notionally subdivided into 5 '' iraimbilanja'' and is one of only two non-decimal currencies currently circulating (the other is the '' Mauritanian ouguiya''). The nam ...
(1 ariary = 5 Malagasy francs). * 1973: Mauritania leaves, replacing the franc with the Mauritanian ouguiya (1 ouguiya = 5 CFA francs). * 1974:
Saint-Pierre and Miquelon Saint Pierre and Miquelon (), officially the Territorial Collectivity of Saint-Pierre and Miquelon (french: link=no, Collectivité territoriale de Saint-Pierre et Miquelon ), is a self-governing territorial overseas collectivity of France in t ...
leaves for French franc, which changed later to the Euro * 1975:
Réunion Réunion (; french: La Réunion, ; previously ''Île Bourbon''; rcf, label= Reunionese Creole, La Rényon) is an island in the Indian Ocean that is an overseas department and region of France. It is located approximately east of the island o ...
leaves for
French franc The franc (, ; sign: F or Fr), also commonly distinguished as the (FF), was a currency of France. Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money. It wa ...
, which changed later to the Euro * 1976: Mayotte leaves for
French franc The franc (, ; sign: F or Fr), also commonly distinguished as the (FF), was a currency of France. Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money. It wa ...
, which changed later to the Euro * 1984: Mali rejoins (1 CFA franc = 2
Malian franc The Malian franc was the independent currency of Mali between 1962 and 1984. Although technically subdivided into 100 ''centimes'', no subdivisions were issued. History Until 1962, Mali used the West African CFA franc. The Malian franc was introd ...
s). * 1985:
Equatorial Guinea Equatorial Guinea ( es, Guinea Ecuatorial; french: Guinée équatoriale; pt, Guiné Equatorial), officially the Republic of Equatorial Guinea ( es, link=no, República de Guinea Ecuatorial, french: link=no, République de Guinée équatoria ...
joins (1 franc = 4 bipkwele) * 1997:
Guinea-Bissau Guinea-Bissau ( ; pt, Guiné-Bissau; ff, italic=no, 𞤘𞤭𞤲𞤫 𞤄𞤭𞤧𞤢𞥄𞤱𞤮, Gine-Bisaawo, script=Adlm; Mandinka: ''Gine-Bisawo''), officially the Republic of Guinea-Bissau ( pt, República da Guiné-Bissau, links=no ) ...
joins (1 franc = 65 pesos)


European Monetary Union

In 1998, in anticipation of Economic and Monetary Union of the European Union, the
Council of the European Union The Council of the European Union, often referred to in the treaties and other official documents simply as the Council, and informally known as the Council of Ministers, is the third of the seven Institutions of the European Union (EU) as ...
addressed the monetary agreements France had with the CFA Zone and Comoros and ruled that: * The agreements are unlikely to have any material effect on the
monetary Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are a ...
and exchange rate policy of the Eurozone * In their present forms and states of implementation, the agreements are unlikely to present any obstacle to a smooth functioning of
economic and monetary union An economic and monetary union (EMU) is a type of trade bloc that features a combination of a common market, customs union, and monetary union. Established via a trade pact, an EMU constitutes the sixth of seven stages in the process of economic ...
* Nothing in the agreements can be construed as implying an obligation for the European Central Bank (ECB) or any national
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
to support the convertibility of the CFA and
Comorian franc The franc (french: link=no, franc comorien; ar, فرنك قمري; sign: FC; ISO 4217 code: KMF) is the official currency of Comoros. It is nominally subdivided into 100 ''centimes'', although no centime denominations have ever been issued. His ...
s * Modifications to the existing agreements will not lead to any obligations for the European Central or any national central bank * The French Treasury will guarantee the free convertibility at a fixed parity between the euro and the CFA and Comorian francs * The competent French authorities shall keep the European Commission, the European Central Bank and the Economic and Financial Committee informed about the implementation of the agreements and inform the Committee prior to changes of the parity between the euro and the CFA and Comorian francs * Any change to the nature or scope of the agreements would require Council approval on the basis of a Commission recommendation and ECB consultation


Criticism and replacement in West Africa

Critics point out that the currency is controlled by the French treasury, and in turn African countries channel more money to France than they receive in aid and have no sovereignty over their monetary policies. In January 2019, Italian ministers accused France of impoverishing Africa through the CFA franc. However, criticism of the CFA franc, coming from various African organizations, continued. On 21 December 2019, President
Alassane Ouattara Alassane Dramane Ouattara (; ; born 1 January 1942) is an Ivorian politician who has been President of Ivory Coast (Côte d'Ivoire) since 2010. An economist by profession, Ouattara worked for the International Monetary Fund (IMF)Ivory Coast and President Emmanuel Macron of France announced an initiative to replace the West African CFA Franc with the Eco. Subsequently, a reform of the West African CFA franc was initiated. In May 2020, the French National Assembly agreed to end the French engagement in the West African CFA franc. The countries using the currency will no longer have to deposit half of their foreign exchange reserves with the French Treasury. The West African CFA franc is expected to be renamed to the " Eco" in the near future. The broader Economic Community of West African States (ECOWAS), of which the members of UEMOA are also members, plans to introduce its own common currency for its member states by 2027, which they have also formally adopted the name of eco for.


Institutions

There are two different currencies called the CFA franc: the West African CFA franc (
ISO 4217 ISO 4217 is a standard published by the International Organization for Standardization (ISO) that defines alpha codes and numeric codes for the representation of currencies and provides information about the relationships between individual cu ...
currency code XOF), and the Central Africa CFA franc (
ISO 4217 ISO 4217 is a standard published by the International Organization for Standardization (ISO) that defines alpha codes and numeric codes for the representation of currencies and provides information about the relationships between individual cu ...
currency code XAF). They are distinguished in French by the meaning of the abbreviation CFA. These two CFA francs have the same exchange rate with the euro (1 euro = 655.957 XOF = 655.957 XAF), and they are both guaranteed by the French treasury (), but the West African CFA franc cannot be used in Central African countries, and the Central Africa CFA franc cannot be used in West African countries.


West African

The West African CFA franc (XOF) is known in
French French (french: français(e), link=no) may refer to: * Something of, from, or related to France ** French language, which originated in France, and its various dialects and accents ** French people, a nation and ethnic group identified with Franc ...
as the , where CFA stands for ('Financial Community of Africa') or ("African Financial Community"). It is issued by the BCEAO (, i.e., "Central Bank of the West African States"), located in Dakar, Senegal, for the eight countries of the UEMOA (, i.e., " West African Economic and Monetary Union"): * * * * * * * * These eight countries have a combined population of 134.7 million people (as of 2021), and a combined GDP of US$179.7 billion (as of 2021).


Central African

The Central Africa CFA franc (XAF) is known in
French French (french: français(e), link=no) may refer to: * Something of, from, or related to France ** French language, which originated in France, and its various dialects and accents ** French people, a nation and ethnic group identified with Franc ...
as the , where CFA stands for ("Financial Cooperation in Central Africa"). It is issued by the BEAC (, i.e., "Bank of the Central African States"), located in
Yaoundé Yaoundé (; , ) is the capital of Cameroon and, with a population of more than 2.8 million, the second-largest city in the country after the port city Douala. It lies in the Centre Region of the nation at an elevation of about 750 metres (2,50 ...
, Cameroon, for the six countries of the CEMAC (, i.e., " Economic and Monetary Community of Central Africa"): * * * * * * These six countries have a combined population of 58.4 million people (as of 2021), and a combined GDP of US$103.3 billion (as of 2021). In 1975, Central African CFA banknotes were issued with an
obverse Obverse and its opposite, reverse, refer to the two flat faces of coins and some other two-sided objects, including paper money, flags, seals, medals, drawings, old master prints and other works of art, and printed fabrics. In this usage, '' ...
unique to each participating country, and common reverse, in a fashion similar to euro coins.
Equatorial Guinea Equatorial Guinea ( es, Guinea Ecuatorial; french: Guinée équatoriale; pt, Guiné Equatorial), officially the Republic of Equatorial Guinea ( es, link=no, República de Guinea Ecuatorial, french: link=no, République de Guinée équatoria ...
, the only former Spanish colony in the zone, adopted the CFA in 1984.


Gallery

File:1 Franc CFA.jpg, A F.CFA 1 coin. File:Cinq cents francs CFA 03.png, 500 West African CFA francs. File:Mille francs CFA 2.jpg, 1000 West African CFA francs.


See also

*
Comorian franc The franc (french: link=no, franc comorien; ar, فرنك قمري; sign: FC; ISO 4217 code: KMF) is the official currency of Comoros. It is nominally subdivided into 100 ''centimes'', although no centime denominations have ever been issued. His ...
*
Currencies related to the euro The international status and usage of the euro has grown since its launch in 1999. When the euro formally replaced 12 currencies on 1 January 2002, it inherited their use in territories such as Montenegro and replaced minor currencies tied ...
*
CFP franc The CFP franc ( French: , called the ''franc'' in everyday use) is the currency used in the French overseas collectivities (, or COM) of French Polynesia, New Caledonia, and Wallis and Futuna. The initials ''CFP'' originally stood for ('Frenc ...
* Réunion franc


References


External links

*'
History of the CFA franc
''

** (in French, but more extensive than the English version)
Decision of the Council of Europe on 23 November 1998 regarding the CFA and Comorian francs"For better or worse: the euro and the CFA franc"
Africa Recovery, Department of Public Information, United Nations (April 1999)


Other


Central Bank of Madagascar
*
Aubin Nzaou-Kongo, International Law and Monetary Sovereignty, African Review of Law, 2020
{{DEFAULTSORT:Cfa Franc Economy of Benin Economy of Chad Currencies introduced in 1945 Fixed exchange rate French West Africa Currencies of Cameroon