EMU law forced France’s CFA agreements into the exchange-rate cooperation category

Evidence

France’s ambition was to link the CFA and Comorian francs to the euro, but to remain wholly in charge, without its European counterparts and the European Union having a say on the matter. The argument of the French authorities was that the agreements they had signed with the African countries of the franc zone, through which they vowed to help ensure the convertibility of the CFA and Comorian francs, did not have a ‘monetary’ character because they didn’t involve any financial commitment on behalf of the Bank of France or the European System of Central Banks (ESCB). It was the French Ministry of Finance, through the Treasury, which promised to provide financial support to African countries, if necessary. According to Paris, these agreements had a ‘budgetary’ nature. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 225 (#contradicts, via linked claim)

In the context of the transition to the euro, the European Economic and Monetary Union (EMU) became the only competent authority in matters of monetary and exchange rate policy. From a legal point of view, its members would no longer be able to seal monetary cooperation agreements or exchange rate agreements with third countries. In the legal language of the European institutions, ‘monetary cooperation’ agreements allow third countries to use the euro as their official currency, such as the European Union’s agreements with the Principality of Monaco, the Vatican State and the Republic of San Marino, while ‘exchange rate cooperation’ agreements refer to the pegging of the currencies of third countries to the euro. Presumably, the agreements between France and the African countries of the franc zone fell into the latter category. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 223 (#expands, via linked claim)

By reassuring its partners that it would not have to shell out any substantial sums to guarantee the convertibility of the CFA and Comorian francs, the French government won the day: a compromise was finally found on the basis of article 111, paragraph 3 and France maintained the exchange rate agreements it had concluded with the African countries of the franc zone. On the other hand, it remained solely responsible for their implementation and would not receive any financial support from the EMU or ECB. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 227 (#qualifies, via linked claim)

Categorization

• XREF: connects to: Portugal replicated France’s currency cooperation model with Cabo Verde.; France classified CFA agreements as budgetary to exclude EU oversight; EMU’s creation transferred monetary authority making France legally unable to renegotiate the franc zone — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 223 (+2 more)

Related

• France classified CFA agreements as budgetary to exclude EU oversight (similarity 0.93)
• France argued its CFA convertibility agreements were budgetary, not monetary, to escape EU oversight (similarity 0.93)
• EMU’s creation transferred monetary authority making France legally unable to renegotiate the franc zone (similarity 0.90)
• France kept sole CFA responsibility by convincing EU partners the guarantee cost nothing (similarity 0.89)
• Portugal replicated France’s currency cooperation model with Cabo Verde. (similarity 0.88)
• France’s CFA convertibility guarantee is backed by zero budgeted euros (similarity 0.86)
• Euro pegging diverts trade toward France and blocks local industrialization. (similarity 0.84)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.83)
• France granted African states nominal monetary rights while denying them in practice (similarity 0.82)
• Demographic reversal will erode France’s capacity to underwrite franc zone currencies (similarity 0.82)
• CFA francs are non-convertible among the three African franc-zone sub-units (similarity 0.82)
• France avoided needing dollars to buy from CFA-zone countries. (similarity 0.82)
• States can leave the franc zone unilaterally without French permission (similarity 0.82)
• The cooperation agreements preserved the CFA franc across former colonies. (similarity 0.82)
• The convertibility guarantee costs France under 1.3 percent of GDP (similarity 0.82)

Broader Connections

• France argued its CFA convertibility agreements were budgetary, not monetary, to escape EU oversight #contradicts (0.65) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 225
• EMU’s creation transferred monetary authority making France legally unable to renegotiate the franc zone #expands (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 223
• France kept sole CFA responsibility by convincing EU partners the guarantee cost nothing #qualifies (0.55) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 227