By RFIPosted on 21-12-2019Changed on 21-12-2019 at 20:23

Next to Emmanuel Macron, Ivorian President Ouattara announced this December 21 the upcoming end of the CFA franc which will be replaced by the eco. The eight countries of the current franc zone in West Africa will cut technical ties with the Treasury and the Banque de France, they will manage this currency themselves without interference from France.

The CFA franc will disappear from West Africa. The eight countries that use this currency will adopt a new currency which will be called the eco. This eight-country eco will therefore become the hard core of the future ECOWAS currency.

The technical links with France are largely cut, that is to say that Paris will no longer co-manage the currency of these eight countries. Foreign exchange reserves will no longer be centralized by France and the obligation to pay 50% of these reserves to the famous French Treasury operating account disappears.

It was a strong demand from part of West African public opinion. " Paris wanted to defuse this criticism, " as a diplomat explains. In addition, France is withdrawing from the management bodies of the CFA. So far, Paris has had a representative at the BCEAO, the Central Bank of West African States, another on the banking commission, and one on the monetary policy council.

Paris, from co-manager to guarantor

The eco will maintain a fixed parity with the euro , which guarantees the same value of the currency for consumers. This provision could evolve over time and depending on the will of other ECOWAS countries when they want to join the eco.

Finally, France retains a guarantor role in the event of a crisis. If ever the countries of the eco zone no longer have enough to pay for their imports, France will do so. Still, if we get there, Paris reserves the right to return to a decision-making body, in this case the monetary policy council.

►Also read: Understanding the CFA franc in four questions

Ultimately, Paris moves from a role of co-manager to a role of guarantor. But in doing so, France made sure to maintain a special economic relationship with the countries of the UEMOA zone. Paris claims that this development is made necessary by the ECOWAS common currency project.

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