France refuses advance accounts because they would reduce its control

Evidence

At a certain point, some countries, aware of the illusory nature of the guarantee of convertibility and the political-monetary tutelage that it implies, asked, as we will see later, to pass to a less rigid system than the operations account. They hoped to be able to create a national currency and to remain linked to France through an ‘advance account’ (‘compte d’avance’), another special account of the French Treasury. This type of account grants a limited guarantee of convertibility, based on a predefined ceiling, and doesn’t require the deposit of foreign reserves at the French Treasury. The mechanism is as follows: the French Treasury opens an advance account with the central bank of country Y. It grants it a credit line of, say, a billion euros for the settlement of its payments to France. The central bank of country Y does the same, making the equivalent in its local currency of this billion euros available to the French Treasury, so that it can make payments in its country. If one of the two institutions makes payments for a value higher than a billion euros, it must find the currency needed to make up the difference. The system is therefore more flexible than the operations account. However, Paris has never agreed to make such an agreement with the few countries that have requested it, probably because the operations account grants France a degree of power and control over the foreign operations of the African countries of the franc zone and more in general over their economic activities that the advance account does not. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 137

Categorization

• DEFINE: Clarifies the ‘compte d’avance’ mechanism as the rejected alternative to the operations account, a key part of the resistance story.
• XREF: connects to: France’s convertibility guarantee was a fraud that would never actually materialize

Related

• African countries lost 250 billion CFA francs by depositing reserves in operations accounts (similarity 0.79)
• France denied Mauritania Treasury guarantees to deter its currency exit, but failed. (similarity 0.79)
• African operations-account credits function as preferential loans to France (similarity 0.79)
• France’s convertibility guarantee was a fraud that would never actually materialize (similarity 0.79)
• France avoided needing dollars to buy from CFA-zone countries. (similarity 0.78)