African countries lost 250 billion CFA francs by depositing reserves in operations accounts

Evidence

In this way, it manages to preserve its foreign reserves, as explained in Chapter 2. Even if its trade balance is deficient vis-à-vis the African countries of the franc zone, it can regulate this deficit in its own currency. Moreover, when the African countries of the franc zone register a trade surplus vis-à-vis the rest of the world, France has access to foreign currency at more economically advantageous conditions than it would otherwise face if it borrowed that same currency. In other words, when the operations accounts of the African countries are in credit, France obtains loans at preferential conditions compared to those prevailing on the financial markets. Thus, through the system of the operations account, the African countries grant France greater financial resources than it would have if it had to rely solely on its own means. Describing this mechanism, the economist Joseph Tchundjang Pouemi spoke of ‘drainage by accounting’. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 251 (#expands, via linked claim)

Ultimately, we are in the presence of a mechanism that defies belief: France uses its presumed role of ‘guarantor’ as a pretext and as a tool to blackmail its former colonies in order to keep them in its orbit, both economically and politically, as we will see in Chapters 4 and 5. Worse, the African states not only guarantee the convertibility of the CFA franc with their own reserves, but continue, in fact, to ‘guarantee’ France’s leading position in the global economy, by accruing important benefits to its economy. All the foundations of the CFA system are based on a mug’s game. Therefore, it is not surprising that African leaders, following their countries’ independence, immediately mobilised against the CFA franc. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 146 (#expands, via linked claim)

Categorization

• XREF: connects to: Operations accounts cost African countries three years of debt service in forfeited gold earnings.; African central banks have periodically earned negative real returns on their French-held reserves; African central banks must deposit half their reserves at the French Treasury — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 112 (+7 more)

Related

• African operations-account credits function as preferential loans to France (similarity 0.92)
• African central banks have periodically earned negative real returns on their French-held reserves (similarity 0.90)
• African franc-zone reserves effectively grant France subsidized loans below market rates. (similarity 0.90)
• The CFA guarantee arrangement secretly benefits France at Africa’s expense (similarity 0.88)
• France’s guarantee is backed by pooled African reserves and French central bank seats (similarity 0.87)
• Placing gold in operations accounts cost African countries three years of debt service (similarity 0.87)
• Operations account balances reflect trade flows, not parked savings reserves (similarity 0.86)
• Operations accounts cost African countries three years of debt service in forfeited gold earnings. (similarity 0.86)
• The CFA franc’s real purpose was draining colonial wealth to France. (similarity 0.86)
• African central banks must deposit half their reserves at the French Treasury (similarity 0.85)
• The CFA system requires African central banks to deposit half their reserves with France. (similarity 0.85)
• African states have effectively paid the French Treasury to hold their reserves. (similarity 0.84)
• The French guarantee of the CFA franc was illusory since African reserves exceeded debts (similarity 0.84)
• CFA convertibility guarantee is cheap only because African economies stay small. (similarity 0.83)
• The CFA franc was a colonial instrument depriving African actors of credit. (similarity 0.83)

Broader Connections

• African central banks have periodically earned negative real returns on their French-held reserves #corroborates (0.70)
• African operations-account credits function as preferential loans to France #expands (0.70) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 251
• African central banks must deposit half their reserves at the French Treasury #corroborates (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 112
• The CFA system requires African central banks to deposit half their reserves with France. #corroborates (0.60)
• The CFA guarantee arrangement secretly benefits France at Africa’s expense #expands (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 146
• The French guarantee of the CFA franc was illusory since African reserves exceeded debts #qualifies (0.50) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 159
• Placing gold in operations accounts cost African countries three years of debt service #exemplifies (0.50) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 581
• Closing the operations account may not end the centralisation of reserves #complicates (0.40) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 376