Franc Zone Ministers Meet in Paris - AfDB at the 40th Anniversary of Africa-France Monetary Cooperation

08/10/2012
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The President of the African Development Bank, Donald Kaberuka, took part in the meeting of Ministers of the franc zone on October 4 and 5 in Paris, alongside franc zone central bank governors and heads of regional institutions.

Africa’s 15 franc zone countries joined France to celebrate 40 years of their financial and monetary cooperation, an initiative spearheaded by France in 1972.

After their independence, most of the newly-created African states decided to remain within a homogenous group characterized by a new institutional framework and a common exchange rate mechanism.

Formally established in December 1945, the CFA and the Comorian franc were pegged to the French franc.

To manage the new common CFA franc, the Central Bank of West African States (BCEAO) was established in 1959, on the eve of independence, to replace the French West Africa Monetary Authority (AOF).

However, the Comorian franc was under the monetary institution until the establishment of the Central Bank of Comoros in 1981.

With the disappearance of the French franc and the adoption of the euro in 1999, the CFA and Comorian franc were attached to the euro at a fixed rate. The two currencies have no direct link to the European Central Bank (ECB).

Four basic principles guide monetary cooperation between France and its African partners: unlimited convertibility guarantee given by the French Treasury, fixed parities, free transferability, and centralization of foreign exchange reserves. In return, the three African central banks deposit part of their foreign exchange reserves in an “operations” account in the French Treasury.