Carlos Lopes, Executive Secretary of the UN Economic Commission for Africa, designee, felt on September 30, that the CFA franc, the currency of 14 countries in West Africa, Central Africa and the Comoros, is an “obsolete mechanism“, thus reviving the debate over the usefulness of maintaining the currency created in 1945.
“The F CFA is an obsolete mechanism that should be reviewed. No country in the world can not have a monetary policy unchanged for 30 years. This exists in the franc zone. So there’s something wrong, “said the UN diplomat within hours of a meeting of finance ministers of the CFA franc zone, held in Paris. “The mechanism is obsolete and is not suited to the international situation which is very dynamic,” he added.
The CFA franc is pegged to the euro and the countries of the franc zone are required to deposit 50% of their foreign exchange reserves with the French Treasury. According to a report of the franc zone, BEAC (Bank of the States of Central Africa) and the BCEAO (Central Bank of West African States) had in 2005 over 3600 billion CFA francs to the french Treasury.
This stowage of the CFA franc to the euro was a guarantee of monetary stability in the franc zone. But the system is also accused by some economists to slow the development of Africa. Indeed, intra-Community trade is still low, and the competitiveness is low because of stowage.
Moreover, the countries of the franc area do not have the 3,600 billion CFA francs (about 72 billion) entrusted under deposits with the French Treasury, to finance their development.