France begins transfer of €5bn to BCEAO as part of CFA franc reform

By Baudelaire Mieu
Posted on Wednesday, 5 May 2021 20:51

Bruno Le Maire, the French economic minister, with his Beninese counterpart, Romuald Wadagni, during the signing of an agreement on the CFA franc reform, in Abidjan, on 21 December 2019. Ludovic Marin/AFP

France has begun the process of transferring €5bn to the accounts of the Banque Centrale des États de l'Afrique de l'Ouest (BCEAO). Paris’ decision comes within the framework of the reform of the CFA franc, which will be replaced by the eco.

The resources in question are the foreign exchange reserves held in the Bank of France’s books that cover the imports of the countries of the Union Economique et Monétaire Ouest-Africaine – Uemoa (West African Economic and Monetary Union).

During his visit to Abidjan from 29 to 30 April, Bruno Le Maire, France’s minister of the economy and finance, reassured Côte d’Ivoire’s President Alassane Ouattara that the CFA franc reform agreements approved in December 2019 would be implemented in their entirety.

As Le Maire tweeted just after his visit, “The end of my stay in Côte d’Ivoire, an example of the strengthened partnership between our two countries and the success that we wish for the continent.”

These agreements finalised the end of the centralisation of half of the BCEAO’s foreign exchange reserves, which are held in the Bank of France’s books. The BCEAO is now supposed to invest them — at its discretion — into the financial institutions and instruments of its choice.

“France transferred the reserve funds. This was part of the agreements made under the eco, which included closing the Bank of France’s reserve accounts,” said one senior source within the Ivorian presidency.

A basket of currencies

Despite the numerous points to be clarified by the countries of the Economic Community of West African States (ECOWAS) in regards to the value of the eco to the euro, officials in Abidjan have insisted that these member countries commit to completing the process of converting to the new currency, despite the change in the initial schedule.

According to our information, the Ivorian presidency will continue to hold discussions with President Ouattara’s counterparts, who still have reservations about converting from the CFA franc to the eco. Some of the leaders that remain to be convinced are Nigeria’s President Muhammadu Buhari, Ghana’s President Nana Akufo Addo and Guinea’s President Alpha Condé.

Abidjan has reiterated that the new currency will eventually be added to a basket of international currencies, which include the euro, the US dollar, the Chinese yuan and the Japanese yen.

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