France’s CFA convertibility guarantee is backed by zero budgeted euros

Evidence

Ultimately, France once again demonstrated that its guarantee is a myth. It is sufficient to examine the budget laws of the years 2016, 2017 and 2018 to confirm this: as already stated in Chapter 2, the French government has not allocated any funds to ensure, if necessary, the convertibility of the CFA franc. The amount indicated on the line dedicated to the ‘monetary agreements’, which refers to the Treasury’s commitments towards the BEAC, the BCEAO and the BCC, is zero euro. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 246 (#corroborates, 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 (#expands, via linked claim)

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 (#expands, via linked claim)

Categorization

• XREF: connects to: Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed; France’s convertibility guarantee was a fraud that would never actually materialize; France has allocated zero euros to guarantee CFA franc convertibility — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 246 (+3 more)

Related

• The convertibility guarantee costs France under 1.3 percent of GDP (similarity 0.95)
• France has allocated zero euros to guarantee CFA franc convertibility (similarity 0.95)
• France’s convertibility guarantee was a fraud that would never actually materialize (similarity 0.94)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.94)
• France kept sole CFA responsibility by convincing EU partners the guarantee cost nothing (similarity 0.93)
• France argued its CFA convertibility agreements were budgetary, not monetary, to escape EU oversight (similarity 0.92)
• French Treasury guarantees unlimited convertibility by lending money to franc zone central banks (similarity 0.89)
• France classified CFA agreements as budgetary to exclude EU oversight (similarity 0.88)
• CFA francs are non-convertible among the three African franc-zone sub-units (similarity 0.87)
• France’s convertibility guarantee enabled capital flight that depleted reserves and forced devaluation (similarity 0.87)
• The French guarantee of the CFA franc was illusory since African reserves exceeded debts (similarity 0.87)
• EMU law forced France’s CFA agreements into the exchange-rate cooperation category (similarity 0.86)
• CFA convertibility guarantee is cheap only because African economies stay small. (similarity 0.85)
• CFA francs are not convertible anywhere in the world outside the French Treasury framework (similarity 0.85)
• The CFA guarantee arrangement secretly benefits France at Africa’s expense (similarity 0.85)

Broader Connections

• France has allocated zero euros to guarantee CFA franc convertibility #corroborates (0.95) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 246
• France kept sole CFA responsibility by convincing EU partners the guarantee cost nothing #expands (0.70) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 227
• France argued its CFA convertibility agreements were budgetary, not monetary, to escape EU oversight #expands (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 225
• The convertibility guarantee costs France under 1.3 percent of GDP #contradicts (0.60)