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. When France ratified the Bretton Woods Agreement in December , 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. 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.

The CFA franc was created with a fixed exchange rate versus the French franc. This exchange rate was changed only twice: in and in 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, who can buy imported manufactured goods cheaply at the expense of farmers who cannot easily export agricultural products.

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.

Critics argue that in exchange for the guarantees provided by the French treasury, African countries channel more money to France than they receive in aid.

They also argue that they have no say in deciding key monetary policies. France responded by recalling Italy's ambassador to Paris.

However, criticism of the CFA franc, coming from various African organisations, continued. The countries using the currency will no longer have to deposit half of their foreign exchange reserves with the French Treasury. They are distinguished in French by the meaning of the abbreviation CFA. Breaking News Close. Business African countries with controlled foreign exchange rates. Africa Several African countries have come under scrutiny over their foreign exchange regimes, that are often strictly managed by states in the face of thin reserves and dollar shortages.

You may also like. Most read. On the same subject. Coins circulate in denominations of 1, 2, 5, 10, 25, 50, , and francs.

The Bank of Central African States manages and issues the currency. France ruled over much of West and Central Africa starting from the middle of the nineteenth century through the middle of the twentieth century. In , the French government established French Equatorial Africa, which was a federation of French colonial possessions in Equatorial Africa, extending northwards from the Congo River into the Sahel.

The colonies of French Equatorial Africa used the French Equatorial franc as the official currency of the region. This money was in circulation from until , when the Central African franc replaced it.

Background

As the countries in this region gained independence from France, they kept the Central African franc as their currency. Equatorial Guinea, the only former Spanish colony in the monetary union, joined it in and adopted the Central African CFA franc as its currency a year later.

• CFA Franc turning 75: Central African countries under pressure;
• CFA Franc turning 75 Central African countries under pressure.
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