African central banks must deposit half their reserves at the French Treasury

Evidence

The BEAC, the BCEAO and the BCC are responsible for issuing the currency and ensuring the monetary and financial stability of their respective zones. They supervise the banking system. The BCEAO and the BEAC have national agencies in each of their member countries: branches that facilitate the circulation of banknotes and coins, the execution of payments and the monitoring and evaluation of economic activity. Depending on the country, they may have auxiliary agencies in specific locations. The BCC manages the official foreign exchange reserves of the Comoros, while the BEAC and the BCEAO manage the official foreign exchange reserves of the countries of their monetary union through a ‘common pot’ (comprising the contributions of each state). According to the terms of the monetary agreements, they must, as noted above, deposit 50 per cent of their reserves at the French Treasury. With the remaining 50 per cent they are free to do what they want, but it should be noted that they often use it to buy bonds denominated in euros (especially in the case of the BEAC) or to reinvest them in French government bonds or other French securities. In short, all roads lead to Paris. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 112

Categorization

• XREF: Connects to the reader’s CFA investigative focus — the 50 per cent reserve deposit is the system’s defining mechanism. — connects to: Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed; France’s guarantee is backed by pooled African reserves and French central bank seats; African countries lost 250 billion CFA francs by depositing reserves in operations accounts (+6 more)

Related

• The CFA system requires African central banks to deposit half their reserves with France. (similarity 0.95)
• African central banks have periodically earned negative real returns on their French-held reserves (similarity 0.91)
• France’s guarantee is backed by pooled African reserves and French central bank seats (similarity 0.90)
• African states have effectively paid the French Treasury to hold their reserves. (similarity 0.87)
• France does not deposit its own reserves into the shared franc zone pot (similarity 0.86)
• African countries lost 250 billion CFA francs by depositing reserves in operations accounts (similarity 0.85)
• African franc-zone reserves effectively grant France subsidized loans below market rates. (similarity 0.85)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.85)
• French Treasury supervision is the backbone of the CFA system’s operations (similarity 0.85)
• When franc zone accounts are in credit, the central banks finance the French Treasury (similarity 0.84)
• French Treasury guarantees unlimited convertibility by lending money to franc zone central banks (similarity 0.83)
• The French Treasury holds accounts in each franc zone central bank (similarity 0.83)
• France granted African states nominal monetary rights while denying them in practice (similarity 0.83)
• CFA francs are non-convertible among the three African franc-zone sub-units (similarity 0.83)
• Closing the operations account may not end the centralisation of reserves (similarity 0.82)

Broader Connections

• African states have effectively paid the French Treasury to hold their reserves. #expands (0.85) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 264
• African operations-account credits function as preferential loans to France #corroborates (0.80) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 251
• France granted African states nominal monetary rights while denying them in practice #exemplifies (0.75)