One of the biggest monetary splits between former colonial power France and French-speaking West African nations occurred on Saturday.
Speaking in Ivory Coast’s commercial capital Abidjan, President Alassane Ouattara announced that the West African Economic and Monetary Union has agreed with France to a number of changes to the CFA franc currency, including a new name.
Mr. Ouattara said the monetary union will move its currency reserve from France, the former colonial power. In addition, France will no longer have a representative on the board of the central bank, Ouattara told reporters during a two-day visit by French President Emmanuel Macron.
These new changes come as the West African bloc inches closer to a split from the French-backed currency.
“This decision shows our determination to create an integrated regional market, dynamic and a source of prosperity for us and for future generations,“ Ouattara said.
Emmanuel Macron reacted by saying he hoped the currency reform would lead to a “dynamic regional market.”
“These reforms put an end to a system that has maybe played out its role and will hopefully lead to greater regional economic mobility and stability,” he said.
The CFA franc is used in two African monetary zones, one for eight West African countries and the other for six Central African nations. These 14 African states keep half of their reserves in France, on which the French treasury pays a 0.75% interest rate.
But Ouattara said that requirement will be scrapped for the West African zone when it transitions to the new currency, to be dubbed the eco.
In Washington D.C., Ms. Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), welcomed the development.
“I welcome the reforms to the WAEMU’s CFA franc currency arrangement that were announced today by Presidents Ouattara and Macron in Abidjan. They constitute a key step in the modernization of long-standing arrangements between the West African Economic and Monetary Union and France,” Ms. Georgieva said in a statement received by TODAY NEWS AFRICA in Washington DC.
She added: “The announced measures build on WAEMU’s proven track record in the conduct of monetary policy and external reserve management. In recent years, the WAEMU has recorded low inflation and high economic growth, the fiscal situation has improved, and the level of foreign exchange reserves has increased.
“The reforms also maintain key elements of stability that have served the region well, including the fixed exchange rate with the euro and the guarantee of unlimited convertibility provided by France.
“The IMF stands ready to engage with the regional authorities, as needed, and to support the implementation of this important initiative.”