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. President Ouattara announced this Friday, December 21: " through an agreement with the other UEMOA heads of state, we decided to reform the CFA franc ". 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 into 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 keep fixed parity with the euro, which guarantees the same value of money 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 have more than 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: The CFA franc, a whole story
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.
By an agreement with the other UEMOA heads of state, we decided to reform the CFA franc with the following three major changes: first, the change of the name of the currency from CFA franc to eco. Secondly, the end of the centralization of 50% of our foreign exchange reserves at the Treasury and the closure of the operating account. Third, the withdrawal of representatives of France from all the WAEMU decision-making and management bodies.
A. Ouattara: "This Saturday, December 21, 2019 is a historic day"