Table of Contents
- 1 Is the CFA franc overvalued?
- 2 How has use of the CFA franc affected Central Africa?
- 3 How many countries in Africa uses CFA?
- 4 How does France benefit from the CFA?
- 5 Does Gabon use the franc?
- 6 What currency does Gabon use?
- 7 Who controls the CFA franc?
- 8 What was the value of 1 CFA franc in 1945?
- 9 When did Central African Republic start issuing CFA coins?
Is the CFA franc overvalued?
As measured by a simple CGE model, in 2020 the CFA franc in the West African Economic and Monetary Union (WAEMU, or UEMOA in French) was 20 percent overvalued, and in the Central African Economic and Monetary Community (known by its French acronym, CEMAC) it was 30 percent overvalued.
How has use of the CFA franc affected Central Africa?
In terms of trade, the CFA’s fixed exchange rate to the euro has led to a greater facilitation of trade through the reduction of uncertainty and stabilization of domestic prices. The CFA franc zone as a whole has thus resulted in: Limited intra-regional trade, especially in Central Africa.
How many countries in Africa uses CFA?
The XAF (Central African CFA Franc) is the official currency of six central African countries: Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea, and Gabon. The currency is backed by the French treasury and pegged to the euro.
Who profits from the CFA franc?
Africa’s money in French bank accounts In return, France guarantees the unlimited convertibility of CFA francs into euros. They charge France with turning a profit from these reserves. The CFA member countries receive 0.75% interest on their deposits, which is paid out to the two region’s central banks.
What African countries use francs?
The West African CFA franc (French: franc CFA; Portuguese: franco CFA or simply franc, ISO 4217 code: XOF) is the currency of eight independent states in West Africa: Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo.
How does France benefit from the CFA?
The value and convertibility of the CFA is guaranteed by the French Treasury,[4] not by the European Central Bank. However, one of the most harmful economic consequences of this monetary arrangement between France and its former colonies is that it encourages the export of capital out of the region.
Does Gabon use the franc?
The national currency of Gabon is Central African CFA franc, XAF.
What currency does Gabon use?
Central African CFA franc
Gabon/Currencies
Does France use euros?
France is a founding member of the European Union and one of the first countries to adopt the euro on 1 January 1999.
What is the CFA symbol?
CFA
F CFA
West African CFA franc/Symbols
Who controls the CFA franc?
Given that it has the responsibility of backing the CFA franc, the French treasury controls 50% of the foreign exchange reserves of all 14 CFA franc using countries. The acronym CFA, as it relates to the Franc, has had a few meanings over the years.
What was the value of 1 CFA franc in 1945?
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).
When did Central African Republic start issuing CFA coins?
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.
Why was the French franc devalued in 1945?
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, thereby facilitating imports from France.