CFA franc

The CFA franc (in French: franc CFA [fʁɑ̃ seɛfɑ], or colloquially franc) is the name of two currencies used in Africa which are guaranteed by the French treasury. The two CFA franc currencies are the West African CFA franc and the Central African CFA franc. Although theoretically separate, the two CFA franc currencies are effectively interchangeable.

Both CFA francs have a fixed exchange rate to the euro: 100 CFA francs = 1 former French (nouveau) franc = 0.152449 euro; or 1 euro = 655.957 CFA francs exactly.

Although Central African CFA francs and West African CFA francs have always been at parity and have therefore always had the same monetary value against other currencies, they are in principle separate currencies. They could theoretically have different values from any moment if one of the two CFA monetary authorities, or France, decided it. Therefore, West African CFA coins and banknotes are theoretically not accepted in countries using Central African CFA francs, and vice versa. However, in practice, the permanent parity of the two CFA franc currencies is widely assumed.

CFA francs are used in fourteen countries: twelve formerly French-ruled nations in West and Central Africa, Guinea-Bissau (a former Portuguese colony), and Equatorial Guinea (a former Spanish colony). These fourteen countries have a combined population of 147.5 million people (as of 2013), and a combined GDP of US$166.6 billion (as of 2012). The ISO currency codes are XAF for the Central African CFA franc and XOF for the West African CFA franc.

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). Others disagree and argue that the CFA "helps stabilize the national currencies of Franc Zone member-countries and greatly facilitates the flow of exports and imports between France and the member-countries." The European Union's own assessment of the CFA's link to the euro, carried out in 2008, noted that "benefits from economic integration within each of the two monetary unions of the CFA franc zone, and even more so between them, remained remarkably low" but that "the peg to the French franc and, since 1999, to the euro as exchange rate anchor is usually found to have had favourable effects in the region in terms of macroeconomic stability.

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