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West Africa renames CFA franc, but keeps euro peg

WEST AFRICA renames CFA FRANC but keeps it pegged to EURO

West Africa renames CFA franc, but keeps euro peg

IMF welcomes the end of the use of the French colonial currency in the West African bloc.

The West African Monetary Union agreed with France to rename its CFA franc to a currency called eco and sever some of the financial ties with Paris that have underpinned the region’s single currency since its inception shortly after World War II..

Under the agreement, the eco will remain pegged to the euro, but the African countries in the bloc will no longer need to keep 50% of their reserves in the French treasury, and there will no longer be a French representative on the monetary union council.

CFA critics have long viewed it as a relic of colonial times, while currency advocates say it provided financial stability in an often troubled region..

«This is a historic day for West Africa», – said the President Cote d&# 39; Ivoire Alassane Ouattara during a joint press conference with French President Emmanuel Macron in the country‘s main city, Abidjan.

In 2017, Macron highlighted the stabilizing advantages of the CFA, but said that African governments should determine the future of the currency themselves..

«Yes, this is the end of some vestiges of the past. Yes, this is progress … I don’t want influence through custody, I don’t want influence through invasion. Today is not the time», – said Macron.

CFA is used in 14 African countries with a total population of approximately US $ 150 million and a gross domestic product of US $ 235 billion.

However, the changes will affect only the West African form of currency, which is in circulation in Benin, Burkina Faso, Guinea-Bissau, Cote d&# 39; Ivoire, Mali, Niger, Senegal and Togo – in all former French colonies except Guinea-Bissau.

West Africa renames CFA franc, but keeps euro peg

The six countries still using the Central African CFA are Cameroon, Chad, Central African Republic, Republic of the Congo, Equatorial Guinea and Gabon – all with the exception of Equatorial Guinea are former French colonies.

The CFA’s value against the French franc remained unchanged from 1948 to 1994, when it was devalued by 50% to stimulate exports from the region.

After the devaluation, 1 French franc was worth 100 CFA, and when the French currency joined the eurozone, the fixed rate settled at 1 euro for 656 CFA francs.

The CFA franc appeared in 1945, at that time its name meant «French colonies in Africa» (French colonies in Africa).

This currently means «Communaute Financiere Africaine» (African Financial Community) in West Africa and in Central Africa that means «Financiere en Afrique Centrale collaboration» (Financial Cooperation in Central Africa).