(5 mins read)
In May 2020, the French Council of Ministers passed a bill modifying its monetary agreement with the eight Francophone West African countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo), following the reform of the CFA announced in December 2019 with the French Treasury.
What is this and what would the reform do?
Critics of the CFA Frank say it’s still a form of modern colonialism by the French. As CFA Francophone nations have to have their currency produced and reserved in French banks.
In other words, the Central Bank of West African States (BCEAO) will no longer have to deposit half of its foreign exchange reserves with the Bank of France, a requirement that was perceived by critics of the CFA franc as putting the West African states in a position of humiliating dependence towards France. The law also requires France to withdraw its presence from the monetary bloc’s governance bodies, such as the BCEAO.
The FCFA Reform agreement provides the following:
Name of the currency
The CFA Franc will be renamed the “Eco”
End of the obligation to deposit foreign exchange reserves in France
Withdrawal of France from governance bodies
However, a French official stated that France will have the right to appoint an independent member of the Monetary Policy Committee to monitor the reserves and that a representative of France will be reintroduced on the Monetary Policy Committee if the level of reserves falls too low.
French Treasury Guarantee
The FCFA Reform agreement provides that France will remain the “financial guarantor” of the “Eco”
• Fixed parity with the Euro
But since the agreement was reached in 2020 between the French government and eight countries in West Africa- no official plan has come to fruition to this day.
Some say the creation of this common currency for all Ecowas states was purely political, used to silence those who called for the end of one of the last remnants of the French colonial era.
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