CFA franc
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The CFA franc (in French: franc CFA, or just franc in everyday conversation if no ambiguity is possible) is a currency used in 12 formerly French-ruled African countries, as well as in Guinea-Bissau (former Portuguese colony) and in Equatorial Guinea (former Spanish colony).
CFA stood for Colonies françaises d'Afrique ("French colonies of Africa") between 1945 and 1958, and 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 the time of their independence, CFA can have two meanings (see Institutions below).
It has a fixed rate compared to the Euro: 100 CFA francs = 0.152449 euro, or 1 euro = 655.957 CFA francs.
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History and exchange rates
The CFA franc was created on December 26, 1945, along with the CFP franc. The reason for the creation of these francs was the weakness of the French franc immediately after the Second World War. 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 of December 1945. René Pleven, the French minister of finance, was quoted 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 vs. the French franc. The exchange rate vs. the French franc was changed only twice: in 1948 and in 1994.
Exchange rate:
- December 26, 1945 to October 16, 1948 - 1 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).
- October 17, 1948 to December 31, 1959 - 1 CFA franc = 2.00 FRF (the CFA franc had followed the French franc's devaluation vs. the US dollar in January 1948, but on October 18, 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 was never revalued again vs. the French franc and followed all the successive devaluations of the French franc)
- January 1, 1960 to January 11, 1994 - 1 CFA franc = 0.02 FRF (January 1, 1960: 100 'old' francs became 1 'new' franc)
- January 12, 1994 to December 31, 1998 - 1 CFA franc = 0.01 FRF (sharp devaluation of the CFA franc to help African exports)
- January 1, 1999 onward - 100 CFA franc = 0.152449 euro or 1 euro = 655.957 CFA franc. (January 1, 1999: euro replaced FRF at the rate of 6.55957 FRF for 1 euro)
The 1960 and 1999 events are merely changes in the currency in use in France: the relative value of the CFA franc vs. the French franc / euro changed only in 1948 and 1994.
The value of the CFA franc has been widely criticized as being too high, which many economists believe favors the urban elite of the African countries which can buy manufactured goods cheaply at the expense of the farmers who cannot easily export agricultural products. The devaluation of 1994 was an attempt to reduce the value of the CFA franc.
Countries and other territories
- 1949: French Somaliland leaves
- 1960: Guinea leaves
- 1967: Réunion leaves
- 1973: Madagascar leaves (1972 according to another source)
- 1973: Mauritania leaves
- 1985: Equatorial Guinea joins
- 1997: Guinea-Bissau joins
Mali also left, but later re-joined.
Institutions
Strictly speaking, there actually exist two different currencies called CFA franc: the West African CFA franc (ISO 4217 currency code XOF), and the Central Africa CFA franc (ISO 4217 currency codes 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 European Central Bank, 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 just known in French as the Franc CFA, where CFA stands for Communauté financière d'Afrique ("Financial Community of Africa"). 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 8 countries of the UEMOA (Union Économique et Monétaire Ouest Africaine, i.e. "West African Economic and Monetary Union"):
These 8 countries have a total population of 75.5 million inhabitants (2003) and a combined GDP of 36.96 billion USD in 2003. This is about the same population and GDP as Vietnam.
In 2004, the 1994 series of West African banknotes were switched for a new series. These new notes have updated security features, and are more modern in design. The switch has also been welcomed by some because of the perception that the old bills were dirty and disease-ridden (1 (http://news.bbc.co.uk/1/hi/world/africa/3654920.stm)). Despite this, there are fears that those living in rural regions will not hear of the changeover, and as a result, will lose their savings when the older series notes are demonetarized. As well, the color of the 5,000 CFA bill was changed from blueish to green, which could leave open the possiblility of the illiterate being shortchanged when switching from the old to the new series.
The anglophone states of Gambia, Ghana, Guinea, Nigeria, and Sierra Leone have formed the West African Monetary Zone (WAMZ) and will introduce a common currency, the ECO, on 1 December 2009. Liberia is also set to join this monetary zone, and the ultimate goal is to unite the UEMOA and the WAMZ to form a single West African monetary zone.
Although Mauritania uses the Mauritanian ouguiya and not the CFA franc, Biffeche (which includes a small part of Mauritania) uses the CFA franc for commerce.
Central African
The Central Africa CFA franc (XAF) is just 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 Yaounde, Cameroon, for the 6 countries of the CEMAC (Communauté Économique et Monétaire de l'Afrique Centrale, i.e. "Economic and Monetary Community of Central Africa"):
These 6 countries have a total population of 34.15 million inhabitants (2003) and a combined GDP of 28.3 billion USD in 2003. This is about the same population as Tanzania, and the same GDP as Kazakhstan.
Equatorial Guinea, the only former Spanish colony in the zone, adopted the CFA in 1984.
Coins in circulation
- 1 Franc
- 5 Francs
- 10 Francs
- 50 Francs
- 100 Francs
- 250 Francs
- 500 Francs
Banknotes in circulation
- 1,000 Francs
- 2,500 Francs
- 5,000 Francs
- 10,000 Francs
See Also
External Links
- Banque Centrale des États de l'Afrique de l'Ouest (http://www.bceao.int/)
- Banque des États de l'Afrique Centrale (http://www.beac.int/)
- Passé et Avenir du Franc C.F.A. (http://www.usenghor-francophonie.org/textintegral/conferences/messmer/titre.htm)
- The CFA franc zone and the EMU (http://www.eldis.org/static/DOC4719.htm)
- U.S. Dollar to CFA Franc (BEAC) Exchange Rate - Yahoo! Finance (http://finance.yahoo.com/currency/convert?amt=1&from=USD&to=XAF&submit=Convert)
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