African states have effectively paid the French Treasury to hold their reserves.

Evidence

For example, the interest rate applied between the 1960s and 1980s was that of the Bank of France, ‘that is, in principle, the lowest interest rate’, as Joseph Tchundjang Pouemi said in 1980. Meanwhile, the Bank of France invested in financial markets at much higher interest rates, ‘between 4 and 5 per cent’. The inflation rate in France at the time was around 8 per cent, ‘thus much higher than the interest rate paid on the “operations account”; this means that, as unbelievable as it may seem, the African states have paid the French Treasury to store their “foreign reserves”, i.e. francs’, the Cameroonian economist noted. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 264

Categorization

• XREF: Connects to the reader’s prior material on how nominal cooperation hides structural transfer — echoes critiques of French ‘monetary paternalism’ in the book so far. — connects to: France’s guarantee is backed by pooled African reserves and French central bank seats; African franc-zone reserves effectively grant France subsidized loans below market rates.; France granted African states nominal monetary rights while denying them in practice (+8 more)
• QUESTION: Worth chasing whether the post-2014 0.75% floor changed the net-transfer picture materially.

Related

• France granted African states nominal monetary rights while denying them in practice (similarity 0.91)
• France’s guarantee is backed by pooled African reserves and French central bank seats (similarity 0.89)
• African franc-zone reserves effectively grant France subsidized loans below market rates. (similarity 0.89)
• African central banks must deposit half their reserves at the French Treasury (similarity 0.87)
• The CFA system requires African central banks to deposit half their reserves with France. (similarity 0.87)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.86)
• French Treasury guarantees unlimited convertibility by lending money to franc zone central banks (similarity 0.86)
• African central banks have periodically earned negative real returns on their French-held reserves (similarity 0.86)
• The CFA guarantee arrangement secretly benefits France at Africa’s expense (similarity 0.86)
• The currency was the core mechanism of French control despite formal sovereignty. (similarity 0.85)
• France avoided needing dollars to buy from CFA-zone countries. (similarity 0.85)
• The convertibility guarantee costs France under 1.3 percent of GDP (similarity 0.85)
• The franc zone’s pooled reserves create both vertical France-African and horizontal inter-African solidarity (similarity 0.85)
• France’s convertibility guarantee enabled capital flight that depleted reserves and forced devaluation (similarity 0.85)
• France’s convertibility guarantee was a fraud that would never actually materialize (similarity 0.85)

Broader Connections

• French Treasury guarantees unlimited convertibility by lending money to franc zone central banks #expands (0.75) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 99
• The CFA guarantee arrangement secretly benefits France at Africa’s expense #expands (0.70) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 146
• France alone preserved its monetary empire after its African colonies gained independence #expands (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 52
• Controlling currency was essential to the colonial appropriation of African riches #exemplifies (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 54