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The CFA franc
CFA franc
(in French: franc CFA [fʁɑ̃ seɛfɑ], or colloquially franc) is the name of two currencies used in parts of West and Central African countries which are guaranteed by the French treasury. The two CFA franc
CFA franc
currencies are the West African CFA franc
West African CFA franc
and the Central African CFA franc. Although theoretically separate, the two CFA franc currencies are effectively interchangeable. The ISO currency codes are XAF for the Central African CFA franc, whereas XOF for the West African CFA franc. Both CFA francs have a fixed exchange rate to the euro: 100 CFA francs = 1 former French (nouveau) franc = 0.152449 euro; or 1 euro = 655.957 CFA francs exactly. Although Central African CFA francs and West African CFA francs have always been at parity and have therefore always had the same monetary value against other currencies, they are in principle separate currencies. They could theoretically have different values from any moment if one of the two CFA monetary authorities, or France, decided it. Therefore, West African CFA coins and banknotes are theoretically not accepted in countries using Central African CFA francs, and vice versa. However, in practice, the permanent parity of the two CFA franc currencies is widely assumed.

Contents

1 Usage 2 Evaluation 3 Name 4 History

4.1 Creation 4.2 Exchange rate 4.3 Changes in countries using the franc 4.4 European Monetary Union

5 Institutions

5.1 West African 5.2 Central African

6 Gallery 7 See also 8 References 9 External links

9.1 Other

Usage[edit] CFA francs are used in fourteen countries: twelve formerly French-ruled nations in West and Central Africa, Guinea-Bissau
Guinea-Bissau
(a former Portuguese colony), and Equatorial Guinea
Equatorial Guinea
(a former Spanish colony). These fourteen countries have a combined population of 147.5 million people (as of 2013),[1] and a combined GDP of US$166.6 billion (as of 2012).[2] The ISO currency codes are XAF for the Central African CFA franc
Central African CFA franc
and XOF for the West African CFA franc. Evaluation[edit] 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).[3] Others disagree and argue that the CFA "helps stabilize the national currencies of Franc
Franc
Zone member-countries and greatly facilitates the flow of exports and imports between France
France
and the member-countries."[4] 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
CFA franc
zone, and even more so between them, remained remarkably low" but that "the peg to the French franc 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.[5] Name[edit] Between 1945 and 1958, CFA stood for Colonies françaises d'Afrique (" French colonies
French colonies
of Africa"); then for Communauté française d'Afrique (" French Community
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),[6] but in actual use, the term can have two meanings (see Institutions below). History[edit] Creation[edit] The CFA franc
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
France
ratified the Bretton Woods Agreement in December 1945, the French franc
French franc
was devalued in order to set a fixed exchange rate with the US dollar. New currencies were created in the French colonies
French colonies
to spare them the strong devaluation, thereby facilitating exports to France.[citation needed] 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."

Exchange rate[edit] The CFA franc
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. Exchange rate:

26 December 1945 to 16 October 1948 – 1 CFA franc
CFA franc
= 1.70 FRF (FRF = French franc). This 0.70 FRF premium 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 – 1 CFA franc
CFA franc
= 2.00 FRF (the CFA franc
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
CFA franc
was revalued against the French franc
French franc
to offset almost all of this new devaluation of the French franc; after October 1948, the CFA was never revalued again versus the French franc
French franc
and followed all the successive devaluations of the French franc) 1 January 1960 to 11 January 1994 – 1 CFA franc
CFA franc
= 0.02 FRF (1 January 1960: the French franc
French franc
redenominated, with 100 "old" francs becoming 1 "new" franc) 12 January 1994 to 31 December 1998 – 1 CFA franc
CFA franc
= 0.01 FRF (sharp devaluation of the CFA franc
CFA franc
to help African exports) 1 January 1999 onwards – 100 CFA franc
CFA franc
= 0.152449 euro or 1 euro = 655.957 CFA franc. (1 January 1999: euro replaced FRF at the rate of 6.55957 FRF for 1 euro)

The 1960 and 1999 events were merely changes in the currency in use in France: the relative value of the CFA franc
CFA franc
versus the French franc/euro changed only in 1948 and 1994. The value of the CFA franc
CFA franc
has been widely criticized as being too high, which many economists believe favours the urban elite of the African countries, who can buy imported manufactured goods cheaply at the expense of farmers who cannot easily export agricultural products. The devaluation of 1994 was an attempt to reduce these imbalances. Changes in countries using the franc[edit] 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
CFA franc
since its introduction, despite the fact that they were never French colonies.

1960: Guinea
Guinea
leaves and begins issuing Guinean francs 1962: Mali
Mali
leaves and begins issuing Malian francs 1973: Madagascar
Madagascar
leaves (in 1972, according to another source) and begins issuing its own francs, the Malagasy franc, which ran concurrently with the Malagasy ariary
Malagasy ariary
(1 ariary = 5 Malagasy francs) 1973: Mauritania
Mauritania
leaves, replacing the franc with the Mauritanian ouguiya (1 ouguiya = 5 CFA francs) 1974: Saint-Pierre and Miquelon
Saint-Pierre and Miquelon
leaves for French franc 1975: Réunion
Réunion
leaves for French franc[7] 1976: Mayotte
Mayotte
leaves for French franc[8] 1984: Mali
Mali
rejoins (1 CFA franc
CFA franc
= 2 Malian francs) 1985: Equatorial Guinea
Equatorial Guinea
joins (1 franc = 4 bipkwele) 1997: Guinea-Bissau
Guinea-Bissau
joins (1 franc = 65 pesos)

European Monetary Union[edit] In 1998, in anticipation of Economic and Monetary Union of the European Union, the Council of the European Union
Council of the European Union
addressed the monetary agreements France
France
has with the CFA Zone and Comoros
Comoros
and ruled that:

The agreements are unlikely to have any material effect on the monetary 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 Nothing in the agreements can be construed as implying an obligation for the European Central Bank
European Central Bank
(ECB) or any national central bank to support the convertibility of the CFA and Comorian francs 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
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

Institutions[edit] There are two different currencies called the CFA franc: the West African CFA franc
CFA franc
( ISO 4217
ISO 4217
currency code XOF), and the Central Africa CFA franc
CFA franc
( ISO 4217
ISO 4217
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 (Trésor public), but the West African CFA franc
West African CFA franc
cannot be used in Central African countries, and the Central Africa CFA franc
CFA franc
cannot be used in West African countries. West African[edit] Main article: West African CFA franc

West African CFA franc
West African CFA franc
coins

The West African CFA franc
West African CFA franc
(XOF) is known in French as the Franc
Franc
CFA, where CFA stands for Communauté financière d'Afrique ("Financial Community of Africa") or Communauté Financière Africaine ("African Financial Community").[9] It is issued by the BCEAO (Banque Centrale des États de l'Afrique de l'Ouest, i.e., "Central Bank of the West African States"), located in Dakar, Senegal, for the eight countries of the UEMOA (Union Économique et Monétaire Ouest Africaine, i.e., "West African Economic and Monetary Union"):

 Benin  Burkina Faso  Guinea-Bissau  Ivory Coast  Mali  Niger  Senegal  Togo

These eight countries have a combined population of 102.5 million people (as of 2013),[1] and a combined GDP of US$78.4 billion (as of 2012).[2] Central African[edit] Main article: Central African CFA franc

Central African CFA franc
Central African CFA franc
coins

1000 Central African CFA franc

The Central Africa CFA franc
CFA franc
(XAF) is known in French as the Franc CFA, where CFA stands for Coopération financière en Afrique centrale ("Financial Cooperation in Central Africa"). It is issued by the BEAC (Banque des États de l'Afrique Centrale, i.e., "Bank of the Central African States"), located in Yaoundé, Cameroon, for the six countries of the CEMAC (Communauté Économique et Monétaire de l'Afrique Centrale, i.e., "Economic and Monetary Community of Central Africa"):

 Cameroon  Central African Republic  Chad  Republic of the Congo  Equatorial Guinea  Gabon

These six countries have a combined population of 45.0 million people (as of 2013),[1] and a combined GDP of US$88.2 billion (as of 2012).[2] In 1975, Central African CFA banknotes were issued with an obverse unique to each participating country, and common reverse, in a fashion similar to euro coins. Equatorial Guinea, the only former Spanish colony in the zone, adopted the CFA in 1984. Gallery[edit]

1 CFA franc
CFA franc
coins.

500 CFA franc.

1000 CFA franc.

See also[edit]

Comorian franc Currencies related to the euro CFP franc Réunion
Réunion
franc

General:

List of French possessions and colonies French colonial empire Economy of Africa

References[edit]

^ a b c Population Reference Bureau. "2013 World Population Data Sheet" (PDF). Retrieved 2013-10-01.  ^ a b c World Bank. "Gross domestic product 2012" (PDF). Retrieved 2013-10-01.  ^ "A strong currency like the CFA franc
CFA franc
makes exports from the CFA-franc zone much more costly than they would ordinarily be and as a result economic growth suffers accordingly. Since most of the countries that use the currency are poor, mostly agricultural economies, this has put a stranglehold on their trade and made them overly dependent upon continuing, privileged access to French and, though them, European markets. That this effectively recreates a quasi-colonial trading relationship between France
France
and its former African colonies that benefits France
France
mightily has not been lost on observers. - See more at: http://afkinsider.com/41946/forex-africa-african-euro/#sthash.bAiuUVxB.dpuf", FOREX Africa: The CFA Franc
Franc
aka The African Euro, By Jeffrey Cavanaugh AFKI Original Published: February 12, 2014, 02:11pm, http://afkinsider.com/41946/forex-africa-african-euro/#sthash.bAiuUVxB.dpuf ^ Economic Integration and Development in Africa, Henry Kyambalesa, Mathurin C. Houngnikpo, pg. 88 ^ The role of Euro
Euro
in Sub Saharan Africa, Economic papers 347, November 2008, http://ec.europa.eu/economy_finance/publications/publication13478_en.pdf ^ Encyclopædia Britannica Online, Communauté Financière Africaine franc; accessed 2008.12.05. ^ IEDOM/Banque de France
France
- History, Historique des billets Archived 3 July 2013 at the Wayback Machine. ^ IEDOM/Banque de France
France
Le mot du Directeur de l'agence de Mayotte ^ "Présentation" (in French). Central Bank of West African States. Retrieved 20 July 2012. 

External links[edit]

Wikimedia Commons has media related to CFA franc.

History of the CFA franc Franc
Franc
zone information at Banque de France
France
(in English)

Franc
Franc
zone information at Banque de France
France
(in French) (Translate to English: Google, Bing) (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[edit]

Central Bank of Madagascar Passé et Avenir du Franc
Franc
C.F.A. (in French) (Translate to English: Google, Bing) The CFA franc
CFA franc
zone and the EMU

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Currencies named franc or similar

Circulating

Burundian franc CFA franc

Central African CFA franc West African CFA franc

CFP franc

New Caledonian franc French Polynesian franc

Comorian franc
Comorian franc
(فرنك) Congolese franc Djiboutian franc
Djiboutian franc
(فرنك) Guinean franc Liechtenstein franc
Liechtenstein franc
(Franken) Rwandan franc
Rwandan franc
(frank) Swiss franc
Swiss franc
(Franken, franco)

Obsolete

Aargau frank Albanian Franga Algerian franc Appenzell frank Basel frank Belgian franc
Belgian franc
(frank) Berne frank Cambodian franc Dominican franco French franc French Camerounian franc French Equatorial African franc French Guianan franc French West African franc Fribourg Frank Geneva franc Glarus frank Graubünden frank Guadeloupe franc Katangese franc Korçë frange Luccan franco Luxembourgish franc
Luxembourgish franc
(Frang, Frank) Luzern frank Malagasy franc Malian franc Martinique franc Monégasque franc Moroccan franc
Moroccan franc
(فرنك) New Hebrides franc Réunion
Réunion
franc Ruanda-Urundi franc Saar franc
Saar franc
(Franken) St. Gallen frank Saint Pierre and Miquelon franc Schaffhausen frank Schwyz frank Solothurn frank Thurgau frank Ticino franco Togolese franc Tunisian franc
Tunisian franc
(فرنك) Unterwalden frank Uri frank US occupation franc (unofficial) Vaud franc Vlorë frank Westphalian frank Zürich frank

Private

UIC franc

See also

Gold franc Franc
Franc
Po

.