CFA franc
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[[Image:Cfa map.png|thumb|Countries where CFA franc is used]]
The '''CFA franc''' (in [[French language|French]]: ''franc CFA'', "céfa", or just ''franc'' colloquially) is a currency used in twelve formerly [[France|French]]-ruled [[African]] countries, as well as in [[Guinea-Bissau]] (a former [[Portugal|Portuguese]] colony) and in [[Equatorial Guinea]] (a former [[Spain|Spanish]] colony). The [[ISO 4217|ISO currency code]]s are '''XAF''' for the [[Central African CFA franc]] and '''XOF''' for the [[West African CFA franc]].
It has a [[fixed exchange rate]] to the [[euro]]: 100 CFA francs = 1 French (nouveau) franc = 0.152449 euro; or 1 euro = 655.957 CFA francs.
Although Central African CFA francs and West African CFA francs have the same monetary value against other currencies, West African CFA coins and banknotes are not accepted in countries using Central African CFA francs, and vice versa.
==Name==
Between 1945 and 1958, CFA stood for ''Colonies françaises d'Afrique'' ("French colonies of Africa"); 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).
==History==
===Creation===
The CFA franc was created on [[December 26]], [[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 ratified the [[Bretton Woods system|Bretton Woods Agreement]] in December 1945, the [[French franc]] was [[devaluation|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. [[René Pleven]], the [[Minister of the Economy, Finance and Industry (France)|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===
The 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:
* [[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 versus 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 versus 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]]: the French franc revalued, with 100 "old" francs becoming 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 were merely changes in the currency in use in France: the [[relative value]] of the CFA franc versus 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 farmers who cannot easily export agricultural products. The devaluation of 1994 was an attempt to reduce these imbalances.
===Countries and other territories===
* 1949: [[French Somaliland]] (Djibouti) leaves
* 1960: [[Guinea]] leaves
* 1962: [[Mali]] leaves
* 1967: [[Réunion]] leaves for French franc
* 1973: [[Madagascar]] leaves (in 1972, according to another source)
* 1973: [[Mauritania]] leaves
* 1974: [[Saint-Pierre and Miquelon]] leaves
* 1984: [[Mali]] rejoins (1 CFA franc = 2 [[Malian franc]]s)
* 1985: [[Equatorial Guinea]] joins (1 "franco" = 4 [[ekwele|bipkwele]])
* 1997: [[Guinea-Bissau]] joins (1 franc = 65 [[Guinea Bissau peso|pesos]])
===European Monetary Union===
In 1998, in anticipation of [[Economic and Monetary Union of the European Union]], the [[Council of the European Union]] addressed the monetary agreements France has with the CFA Zone and [[Comoros]] and ruled that:
* The agreements are unlikely to have any material effect on the [[monetary policy|monetary]] and [[exchange rate regime|exchange rate policy]] of the [[Euro zone]]
* 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 of the European Union|economic and monetary union]]
* Nothing in the agreements can be construed as implying an obligation for the [[European Central Bank]] (ECB) or any national [[central bank]] to support the convertibility of the CFA and [[Comorian franc]]s
* 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 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==
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 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 cannot be used in Central African countries, and the Central Africa CFA franc cannot be used in West African countries.
===West African===
{{main|West African CFA franc}}
The West African CFA franc (XOF) is just known in [[French language|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]], [[Sénégal]], for the 8 countries of the UEMOA (''Union Économique et Monétaire Ouest Africaine'', i.e. "[[West African Economic and Monetary Union]]"):
*[[Benin]]
*[[Burkina Faso]]
*[[Côte d'Ivoire]]
*[[Guinea-Bissau]]
*[[Mali]]
*[[Niger]]
*[[Sénégal]]
*[[Togo]]
===Central African===
{{main|Central African CFA franc}}
The Central Africa CFA franc (XAF) is just known in [[French language|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]]"):
*[[Cameroon]]
*[[Central African Republic]]
*[[Chad]]
*[[Republic of the Congo]]
*[[Equatorial Guinea]]
*[[Gabon]]
Interestingly, 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.
==See also==
*[[Economy of Africa]]
*[[Comorian franc]]
*[[Currencies related to the euro]]
*[[CFP franc]]
==External links==
*[http://www.globalfinancialdata.com/index.php3?action=showghoc&country_name=Franc_Communaute_Financiere_Africaine_(CFA) History of the CFA franc]
*[http://www.banque-france.fr/gb/eurosys/zonefr/zonefr.htm Franc zone information at Banque de France] (in [[English language|English]])
*{{fr icon}} [http://www.banque-france.fr/fr/eurosys/zonefr/zonefr.htm Franc zone information at Banque de France] (in French, but more extensive than the English version)
*[http://europa.eu.int/eur-lex/pri/en/oj/dat/1998/l_320/l_32019981128en00580059.pdf Decision of the Council of Europe on 23 November 1998 regarding the CFA and Comorian francs]
*[http://www.un.org/ecosocdev/geninfo/afrec/subjindx/subpdfs/124euro.pdf "For better or worse: the euro and the CFA franc"], Africa Recovery, Department of Public Information, United Nations (April 1999)
===Other===
*[http://www.banque-centrale.mg Central Bank of Madagascar]
*{{fr icon}} [http://www.usenghor-francophonie.org/textintegral/conferences/messmer/titre.htm Passé et Avenir du Franc C.F.A.]
*[http://www.eldis.org/static/DOC4719.htm The CFA franc zone and the EMU]
{{Franc}}
[[Category:Economy of Benin]]
[[Category:Economy of Chad]]
[[Category:Monetary unions]]
[[Category:Fixed exchange rate]]
[[Category:French West Africa]]
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