Currency pegging institutionalized a principle of automaticity removing colonial control over exchange rates.

Evidence

Far from marking the end of the ‘colonial pact’, the birth of the CFA franc favoured the restoration of very advantageous trade relations for France. The creation of this new currency also sanctioned the institutionalisation of a ‘principle of automaticity’: since the currency of the colonised territories was firmly pegged to that of the metropole, the colonies were deprived of the possibility of regulating the exchange rate of their currencies and therefore found themselves forced to passively endure the unilateral decisions of the metropole, which adjusted the external value of its currency according to its needs. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 78

Categorization

• DEFINE: Names and explains the ‘principle of automaticity’ — the structural mechanism at the heart of the colonial pact’s monetary dimension.
• XREF: connects to: Currency arrangements can function as wealth-transfer mechanisms between societies.; Taxation in colonial currency was designed to force conversion to capitalism.; Controlling currency was essential to the colonial appropriation of African riches — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 54 (+3 more)

Related

• Taxation in colonial currency was designed to force conversion to capitalism. (similarity 0.87)
• Controlling currency was essential to the colonial appropriation of African riches (similarity 0.84)
• Currency arrangements can function as wealth-transfer mechanisms between societies. (similarity 0.84)
• Colonial-era monetary system survived into independence as four interlocked principles (similarity 0.82)
• Foreign-backed monetary systems subordinate a state to that foreign country. (similarity 0.82)
• Currency arrangements can transfer wealth from colonies to metropolis (similarity 0.82)
• Nkrumah warned in 1963 that foreign-backed currencies subordinate African states (similarity 0.81)
• France imposed its currency partly to counter English trading dominance (similarity 0.81)
• The CFA franc’s fixed peg forced colonies to absorb French devaluations helplessly (similarity 0.81)
• The CFA franc’s parity was set without regard for local economic realities (similarity 0.81)
• The currency was the core mechanism of French control despite formal sovereignty. (similarity 0.80)
• Euro pegging diverts trade toward France and blocks local industrialization. (similarity 0.80)
• CFA franc parity was frozen at 50 per French franc from 1958 to 1994 (similarity 0.80)
• The CFA franc gives France instruments to control the politics of 15 African states. (similarity 0.80)
• CFA franc parity changed only once since 1948 (similarity 0.80)

Broader Connections

• Foreign-backed monetary systems subordinate a state to that foreign country. #responds-to (0.40) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 369