France: One step closer to ending the CFA franc
On 20 May, the French Council of Ministers passed a bill modifying its monetary agreement with the eight member states of the West African Economic and Monetary Union (UEMOA), following the unexpected CFA franc reform announced this past December.
We are one step closer to the end of the CFA franc. At the close of the French Council of Ministers’ meeting held on 20 May, France passed a bill ratifying the reform of the monetary agreement binding Paris to the eight member states of the West African Economic and Monetary Union (UEMOA).
In accordance with the unexpected announcement made about the reform on 21 December in Abidjan, the law provides for the end of the centralisation of foreign exchange reserves of the West African states with the French Treasury.
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.
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A “mere financial guarantor”
“France’s role is changing into that of a mere financial guarantor,” the minutes from the Council of Ministers’ meeting read. “This new position enables us to support the UEMOA in its commitment to pursuing the single currency project of the Economic Community of West African States (ECOWAS).”
READ MORE: The pros and cons of the CFA franc zone
As part of the reform, Côte d’Ivoire President Alassane Ouattara previously announced, in the company of France’s President Emmanuel Macron, that the UEMOA states had also decided to change the name of their currency, the hotly disputed CFA franc, to the Eco, a point which has heightened tensions between African countries.
One such illustration of this: in early February, Nigeria requested that the Eco’s launch be postponed, arguing that the convergence criteria set out in the ECOWAS member states’ roadmap – and required for the implementation of the future currency – had still not been met.