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Fast Money & Foreign Objects
CFA franc
From Wikipedia, the free encyclopedia
Usage of:
West African CFA franc
Central African CFA franc
The CFA franc (in French: franc CFA [fʁɑ̃ seɛfɑ], or colloquially franc) is the name of two currencies used in Africa which are guaranteed by the French treasury. The two CFA franc currencies are the West African CFA franc and the Central African CFA franc. Although theoretically separate, the two CFA franc currencies are effectively interchangeable.
Both CFA Francs currently have a fixed exchange rate to the euro: 100 CFA francs = 1 former French (nouveau) franc = 0.152449 euro; or 1 euro = 655.957 CFA francs exactly.
Although Central African CFA francs and West African CFA francs have always been at parity and have therefore always had the same monetary value against other currencies, they are in principle separate currencies. They could theoretically have different values from any moment if one of the two CFA monetary authorities, or France, decided it. Therefore, West African CFA coins and banknotes are theoretically not accepted in countries using Central African CFA francs, and vice versa. However, in practice, the permanent parity of the two CFA franc currencies is widely assumed.
CFA Francs are used in fourteen countries: twelve formerly French-ruled nations in West and Central Africa, as well as in Guinea-Bissau (a former Portuguese colony) and inEquatorial Guinea (a former Spanish colony). These fourteen countries have a combined population of 147.5 million people (as of 2013),[1] and a combined GDP of US$166.6 billion (as of 2012).[2] The ISO currency codes are XAF for the Central African CFA franc and XOF for the West African CFA franc.
The currency has been criticized for making economic planning for the developing countries of French West-Africa all but impossible since the CFA's value is pegged to the Euro (whose monetary policy is set by the European Central Bank).[3] Others disagree and 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."[4] The European Union's own assessment of the CFA's link to the Euro, carried out in 2008, noted that "benefits from economic integration within each of the two monetary unions of the CFA franc zone, and even more so between them, remained remarkably low" but that "the peg to the French franc and, since 1999, to the euro as exchange rate anchor is usually found to have had favourable effects in the region in terms of macroeconomic stability.[5]
Contents
[hide]
Name[edit]
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 independence, CFA is taken to mean Communauté Financière Africaine (African Financial Community),[6] but in actual use, the term can have two meanings (see Institutions below).
History[edit]
Creation[edit]
The CFA franc was created on 26 December 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 Agreement in December 1945, theFrench 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, thereby facilitating exports to France.[citation needed] French officials presented the decision as an act of generosity. René Pleven, the 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[edit]
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:
The value of the CFA franc has been widely criticized as being too high, which many economists believe favours the urban elite of the African countries, which can buy imported 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.
Changes in countries using the franc[edit]
Over time, the number of countries and territories using the CFA franc has changed as some countries began introducing their own separate currencies. A couple of nations in West Africa have also chosen to adopt the CFA franc since its introduction, despite the fact that they were never French colonies.
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From Wikipedia, the free encyclopedia
Usage of:
West African CFA franc
Central African CFA franc
The CFA franc (in French: franc CFA [fʁɑ̃ seɛfɑ], or colloquially franc) is the name of two currencies used in Africa which are guaranteed by the French treasury. The two CFA franc currencies are the West African CFA franc and the Central African CFA franc. Although theoretically separate, the two CFA franc currencies are effectively interchangeable.
Both CFA Francs currently have a fixed exchange rate to the euro: 100 CFA francs = 1 former French (nouveau) franc = 0.152449 euro; or 1 euro = 655.957 CFA francs exactly.
Although Central African CFA francs and West African CFA francs have always been at parity and have therefore always had the same monetary value against other currencies, they are in principle separate currencies. They could theoretically have different values from any moment if one of the two CFA monetary authorities, or France, decided it. Therefore, West African CFA coins and banknotes are theoretically not accepted in countries using Central African CFA francs, and vice versa. However, in practice, the permanent parity of the two CFA franc currencies is widely assumed.
CFA Francs are used in fourteen countries: twelve formerly French-ruled nations in West and Central Africa, as well as in Guinea-Bissau (a former Portuguese colony) and inEquatorial Guinea (a former Spanish colony). These fourteen countries have a combined population of 147.5 million people (as of 2013),[1] and a combined GDP of US$166.6 billion (as of 2012).[2] The ISO currency codes are XAF for the Central African CFA franc and XOF for the West African CFA franc.
The currency has been criticized for making economic planning for the developing countries of French West-Africa all but impossible since the CFA's value is pegged to the Euro (whose monetary policy is set by the European Central Bank).[3] Others disagree and 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."[4] The European Union's own assessment of the CFA's link to the Euro, carried out in 2008, noted that "benefits from economic integration within each of the two monetary unions of the CFA franc zone, and even more so between them, remained remarkably low" but that "the peg to the French franc and, since 1999, to the euro as exchange rate anchor is usually found to have had favourable effects in the region in terms of macroeconomic stability.[5]
Contents
[hide]
Name[edit]
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 independence, CFA is taken to mean Communauté Financière Africaine (African Financial Community),[6] but in actual use, the term can have two meanings (see Institutions below).
History[edit]
Creation[edit]
The CFA franc was created on 26 December 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 Agreement in December 1945, theFrench 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, thereby facilitating exports to France.[citation needed] French officials presented the decision as an act of generosity. René Pleven, the 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[edit]
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:
- 26 December 1945 to 16 October 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).
- 17 October 1948 to 31 December 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 18 October 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)
- 1 January 1960 to 11 January 1994 – 1 CFA franc = 0.02 FRF (1 January 1960: the French franc redenominated, with 100 "old" francs becoming 1 "new" franc)
- 12 January 1994 to 31 December 1998 – 1 CFA franc = 0.01 FRF (sharp devaluation of the CFA franc to help African exports)
- 1 January 1999 onwards – 100 CFA franc = 0.152449 euro or 1 euro = 655.957 CFA franc. (1 January 1999: euro replaced FRF at the rate of 6.55957 FRF for 1 euro)
The value of the CFA franc has been widely criticized as being too high, which many economists believe favours the urban elite of the African countries, which can buy imported 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.
Changes in countries using the franc[edit]
Over time, the number of countries and territories using the CFA franc has changed as some countries began introducing their own separate currencies. A couple of nations in West Africa have also chosen to adopt the CFA franc since its introduction, despite the fact that they were never French colonies.
- 1960: Guinea leaves and begins issuing Guinean francs
- 1962: Mali leaves and begins issuing Malian francs
- 1973: Madagascar leaves (in 1972, according to another source) and begins issuing its own francs, the Malagasy franc, which ran concurrently with the Malagasy ariary (1 ariary = 5 Malagasy francs)
- 1973: Mauritania leaves, replacing the franc with the Mauritanian ouguiya (1 ouguiya = 5 CFA francs)
- 1974: Saint-Pierre and Miquelon leaves for French franc
- 1975: Réunion leaves for French franc [7]
- 1976: Mayotte leaves for French franc [8]
- 1984: Mali rejoins (1 CFA franc = 2 Malian francs)
- 1985: Equatorial Guinea joins (1 franc = 4 bipkwele)
- 1997: Guinea-Bissau joins (1 franc = 65 pesos)
more in link
Whats going on here?
Why is the sky blue? Why is water wet?
Why did Judas rat to Romans while Jesus slept?
@mbewane @Liu Kang
