The CFA Franc Zone: Currency Union and Monetary Standard

Abstract

The CFA franc zone comprises a group of countries in central and west Africa whose currencies have been firmly linked to the French franc since 1948. It combines the features of a currency union with those of an exchange rate peg, and an analysis of its effectiveness must examine both dimensions. Viewed from the perspective of a currency union among the African countries, it would appear that the zone would not constitute an optimum currency area. But when France is viewed as an integral part of the system, the benefits--including discipline, credibility, and stability in international competitiveness--become clearer.

Beyond Emu: The Problem of Sustainability

“…I6While for some authors [e.g., Boughton (1993)l the impact of France's role is, on balance, positive, promoting monetary discipline and stability, for others, the effect is clearly for the worse insofar as it perpetuates dependency, retards economic development, and reinforces income inequality. See, e.g., Yansane (1978Yansane ( -1979; Martin (1986); van de Walle (1991).…”

“…The immediate purpose of the Latin Monetary Union, formed by Belgium, France, Italy, and Switzerland in 1865, was to standardize existing gold and silver 'Comprehensive sources on these cases are not easy to come by. The best available introductions are as follows: for the Latin Monetary Union and Scandinavian Monetary Union, Nielsen (1933) and Bartel (1974); for the Belgium-Luxembourg Economic Union, Meade (1956); for the CFA Franc Zone, Boughton (1993); for the East African Community. Letiche (1974); and for the East Caribbean Currency Area, McClean (1975). coinages.…”

Money and Economic Activity in Developing Countries: Evidence Based on Cointegration and Causality Tests

“…6. For the relationship between central bank independence and macroeconomic performance, see the studies by Cukierman et al (1992), and Alesina and Summers (1993 Boughton (1991). 10.…”

“…The apparent reason for this is that Cote d'lvoire is a member of the CFA franc zone countries whose currency is tied to the French franc. As Boughton (1991) indicated, the CFA countries have gained monetary discipline and credibility through rules, especially, the rule that limits the extension of credit to each government in the franc zone to a maximum of 20 percent of the previous year's fiscal revenue.9…”

National and international policies for tropical rain forest conservation?A quantitative analysis for Cameroon

“…But devaluations of the currencies of neighboring competitors like Ghana and Nigeria and the strength of the French franc vis-a-vis the US dollar since 1985 led to significant appreciations of the real effective exchange rates in some member states of the CFA-zone, particularly in Cameroon and Cote d'lvoire, who have relatively substantial trade with the United States (Boughton, 1991). Milner (1990) estimates that Cameroon had a currency overvaluation of 12 percent in 1986.…”