France’s convertibility guarantee was a fraud that would never actually materialize

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)

Modibo Keita complained that the franc zone system had prevented the diversification of the country’s economy and that all decision-making powers were held by Paris. ‘How can we promote the harmonious economic development of the nation if we lack the necessary means, and in particular that powerful lever that is the currency?’, he asked. He also harshly criticised the operations account system: ‘The guarantee that a state can grant to a foreign currency is too often an illusory guarantee, more psychological than anything else. […] France guarantees the CFA franc only because it knows that this guarantee will never really materialise. It is worth remembering, for example, that the African states that are members of the current West African emission zone have a credit of around 30 billion vis-à-vis France. Paradoxically, this means that in recent years the CFA franc has not needed the guarantee of the French franc.’ — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 159 (#complicates, via linked claim)

Categorization

• XREF: connects to: France’s convertibility guarantee enabled capital flight that depleted reserves and forced devaluation; France’s CFA convertibility guarantee is backed by zero budgeted euros; The convertibility guarantee costs France under 1.3 percent of GDP (+5 more)

Related

• The convertibility guarantee costs France under 1.3 percent of GDP (similarity 0.95)
• France’s CFA convertibility guarantee is backed by zero budgeted euros (similarity 0.94)
• The French guarantee of the CFA franc was illusory since African reserves exceeded debts (similarity 0.92)
• France has allocated zero euros to guarantee CFA franc convertibility (similarity 0.92)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.91)
• France’s convertibility guarantee enabled capital flight that depleted reserves and forced devaluation (similarity 0.91)
• CFA convertibility guarantee is cheap only because African economies stay small. (similarity 0.90)
• France kept sole CFA responsibility by convincing EU partners the guarantee cost nothing (similarity 0.89)
• CFA francs are non-convertible among the three African franc-zone sub-units (similarity 0.89)
• The CFA guarantee arrangement secretly benefits France at Africa’s expense (similarity 0.88)
• French Treasury guarantees unlimited convertibility by lending money to franc zone central banks (similarity 0.88)
• France argued its CFA convertibility agreements were budgetary, not monetary, to escape EU oversight (similarity 0.87)
• France’s guarantee is backed by pooled African reserves and French central bank seats (similarity 0.86)
• France denied Mauritania Treasury guarantees to deter its currency exit, but failed. (similarity 0.86)
• CFA francs are not convertible anywhere in the world outside the French Treasury framework (similarity 0.86)

Broader Connections

• France’s CFA convertibility guarantee is backed by zero budgeted euros #corroborates (0.90)
• France has allocated zero euros to guarantee CFA franc convertibility #corroborates (0.90) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 246
• The French guarantee of the CFA franc was illusory since African reserves exceeded debts #complicates (0.70) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 159
• The convertibility guarantee costs France under 1.3 percent of GDP #qualifies (0.60)
• France granted African states nominal monetary rights while denying them in practice #expands (0.60)
• France refuses advance accounts because they would reduce its control #complicates (0.50) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 137
• France denied Mauritania Treasury guarantees to deter its currency exit, but failed. #exemplifies (0.50) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 177