The CFA system requires African central banks to deposit half their reserves with France.

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 (#corroborates, via linked claim)

When the operations accounts are in credit, we can therefore say that the central banks are financing the French Treasury because they are putting their foreign exchange reserves at its disposal. In that case the French Treasury pays them interest. By contrast, when the operations accounts are in debit position, the central banks must pay interest to the French Treasury. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 106 (#expands, via linked claim)

Categorization

• XREF: connects to: Nkrumah warned in 1963 that foreign-backed currencies subordinate African states; Portugal replicated France’s currency cooperation model with Cabo Verde.; CFA notes and coins are still manufactured in France. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 45 (+12 more)

Related

• African central banks must deposit half their reserves at the French Treasury (similarity 0.95)
• France’s guarantee is backed by pooled African reserves and French central bank seats (similarity 0.91)
• African central banks have periodically earned negative real returns on their French-held reserves (similarity 0.90)
• African franc-zone reserves effectively grant France subsidized loans below market rates. (similarity 0.87)
• French Treasury supervision is the backbone of the CFA system’s operations (similarity 0.87)
• African states have effectively paid the French Treasury to hold their reserves. (similarity 0.87)
• France does not deposit its own reserves into the shared franc zone pot (similarity 0.86)
• When franc zone accounts are in credit, the central banks finance the French Treasury (similarity 0.86)
• CFA francs are non-convertible among the three African franc-zone sub-units (similarity 0.86)
• The French Treasury holds accounts in each franc zone central bank (similarity 0.86)
• African countries lost 250 billion CFA francs by depositing reserves in operations accounts (similarity 0.85)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.85)
• CFA notes and coins are still manufactured in France. (similarity 0.85)
• France avoided needing dollars to buy from CFA-zone countries. (similarity 0.84)
• Portugal replicated France’s currency cooperation model with Cabo Verde. (similarity 0.84)

Broader Connections

• African central banks must deposit half their reserves at the French Treasury #corroborates (0.95) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 112
• When franc zone accounts are in credit, the central banks finance the French Treasury #expands (0.70) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 106