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Concept
CFA franc
Summary
The CFA franc (franc CFA, fʁɑ̃ seɛfɑ, Franc of the Financial Community of Africa, originally Franc of the French Colonies in Africa, or colloquially franc; abbreviation: F.CFA) is the name of two currencies, the West African CFA franc, used in eight West African countries, and the Central African CFA franc, used in six Central African 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. 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 (peg) to the euro: €1 = F.CFA 655.957 exactly, and member countries deposited half of their foreign exchange reserves with the French Treasury. The currency has 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 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".
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. The West African CFA franc is expected to be renamed as the "Eco" in the near future.
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 193.1 million people (as of 2021), and a combined GDP of US$283.0 billion (as of 2021).
Official source
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