France’s guarantee is backed by pooled African reserves and French central bank seats

Evidence

The BEAC, the BCEAO and the BCC are responsible for issuing the currency and ensuring the monetary and financial stability of their respective zones. They supervise the banking system. The BCEAO and the BEAC have national agencies in each of their member countries: branches that facilitate the circulation of banknotes and coins, the execution of payments and the monitoring and evaluation of economic activity. Depending on the country, they may have auxiliary agencies in specific locations. The BCC manages the official foreign exchange reserves of the Comoros, while the BEAC and the BCEAO manage the official foreign exchange reserves of the countries of their monetary union through a ‘common pot’ (comprising the contributions of each state). According to the terms of the monetary agreements, they must, as noted above, deposit 50 per cent of their reserves at the French Treasury. With the remaining 50 per cent they are free to do what they want, but it should be noted that they often use it to buy bonds denominated in euros (especially in the case of the BEAC) or to reinvest them in French government bonds or other French securities. In short, all roads lead to Paris. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 112 (#expands, via linked claim)

Ultimately, we are in the presence of a mechanism that defies belief: France uses its presumed role of ‘guarantor’ as a pretext and as a tool to blackmail its former colonies in order to keep them in its orbit, both economically and politically, as we will see in Chapters 4 and 5. Worse, the African states not only guarantee the convertibility of the CFA franc with their own reserves, but continue, in fact, to ‘guarantee’ France’s leading position in the global economy, by accruing important benefits to its economy. All the foundations of the CFA system are based on a mug’s game. Therefore, it is not surprising that African leaders, following their countries’ independence, immediately mobilised against the CFA franc. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 146 (#expands, via linked claim)

Categorization

• XREF: connects to: Nkrumah warned in 1963 that foreign-backed currencies subordinate African states; CFA francs are non-convertible among the three African franc-zone sub-units; The CFA guarantee arrangement secretly benefits France at Africa’s expense — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 146 (+13 more)

Related

• The CFA guarantee arrangement secretly benefits France at Africa’s expense (similarity 0.91)
• The CFA system requires African central banks to deposit half their reserves with France. (similarity 0.91)
• African franc-zone reserves effectively grant France subsidized loans below market rates. (similarity 0.90)
• CFA francs are non-convertible among the three African franc-zone sub-units (similarity 0.90)
• African central banks must deposit half their reserves at the French Treasury (similarity 0.90)
• The CFA franc’s real purpose was draining colonial wealth to France. (similarity 0.89)
• The French guarantee of the CFA franc was illusory since African reserves exceeded debts (similarity 0.89)
• African states have effectively paid the French Treasury to hold their reserves. (similarity 0.89)
• The CFA franc was a colonial instrument depriving African actors of credit. (similarity 0.89)
• CFA convertibility guarantee is cheap only because African economies stay small. (similarity 0.89)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.88)
• France granted African states nominal monetary rights while denying them in practice (similarity 0.88)
• African central banks have periodically earned negative real returns on their French-held reserves (similarity 0.88)
• African deputies publicly exposed the CFA franc as a tool of the colonial pact (similarity 0.88)
• The franc zone’s pooled reserves create both vertical France-African and horizontal inter-African solidarity (similarity 0.87)

Broader Connections

• African central banks must deposit half their reserves at the French Treasury #expands (0.80) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 112
• The CFA system requires African central banks to deposit half their reserves with France. #expands (0.80)
• 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
• The franc zone’s pooled reserves create both vertical France-African and horizontal inter-African solidarity #expands (0.70) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 102
• African states have effectively paid the French Treasury to hold their reserves. #expands (0.65) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 264
• The CFA franc functions as a political instrument of pressure over 15 African states. #expands (0.65)
• The French guarantee of the CFA franc was illusory since African reserves exceeded debts #contradicts (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 159
• CFA franc’s real aims were draining colonial wealth into France, not African progress. #expands (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 44
• The CFA franc was a colonial instrument depriving African actors of credit. #expands (0.60)
• The CFA franc was a political choice that deprived non-adapting African actors of credit #expands (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 192
• Franc-zone bank credit allocation suppressed African firms competing with French companies #expands (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 128
• Paris devalued the French franc unilaterally without consulting African states #expands (0.55)
• African criticism did not alter no French control of the CFA system. #expands (0.50) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 80
• The 1994 devaluation was decided under French and IMF supervision in Dakar #expands (0.50)