The French Treasury holds accounts in each franc zone central bank

Evidence

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 (#corroborates, via linked claim)

The free convertibility of the currency, the third operational principle of the franc zone, means that CFA and Comorian francs can be exchanged for the French currency (first the franc, now the euro) without restrictions. This unlimited convertibility is guaranteed by the French Treasury: through the monetary agreements it has entered into with the African authorities, it has undertaken to lend all the money necessary to the central banks of the franc zone in the eventuality that they should exhaust their reserves. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 99 (#qualifies, via linked claim)

France’s positions as a privileged creditor in the franc zone is due to at least three reasons. First, the stability of the exchange rate offered by the fixed parity tends to encourage borrowing in the anchor currency: the exchange rate risk against the euro is lower than that of other currencies. Second, as we shall see later, the CFA system pushes domestic credit down, forcing states to resort to foreign debt to finance their development. Finally, the political dimension of the CFA franc, which places the states of the franc zone under the tutelage of the French government, often forces them to turn to France in case of need. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 252 (#corroborates, via linked claim)

Categorization

• XREF: connects to: Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed; When franc zone accounts are in credit, the central banks finance the French Treasury — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 106; French Treasury guarantees unlimited convertibility by lending money to franc zone central banks — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 99 (+1 more)

Related

• When franc zone accounts are in credit, the central banks finance the French Treasury (similarity 0.95)
• French Treasury guarantees unlimited convertibility by lending money to franc zone central banks (similarity 0.92)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.88)
• Fixed parity and credit compression make France the zone’s privileged creditor (similarity 0.88)
• France avoided needing dollars to buy from CFA-zone countries. (similarity 0.87)
• The CFA system requires African central banks to deposit half their reserves with France. (similarity 0.86)
• African central banks have periodically earned negative real returns on their French-held reserves (similarity 0.85)
• Franc-zone banks hold idle liquidity instead of lending to the economy. (similarity 0.85)
• French Treasury supervision is the backbone of the CFA system’s operations (similarity 0.85)
• African franc-zone reserves effectively grant France subsidized loans below market rates. (similarity 0.85)
• Reserve centralisation persists indirectly through purchases of French debt (similarity 0.85)
• CFA francs are non-convertible among the three African franc-zone sub-units (similarity 0.85)
• CFA francs are not convertible anywhere in the world outside the French Treasury framework (similarity 0.84)
• African states have effectively paid the French Treasury to hold their reserves. (similarity 0.84)
• Franc-zone central banks must restrict domestic credit to defend the fixed euro parity (similarity 0.84)

Broader Connections

• When franc zone accounts are in credit, the central banks finance the French Treasury #corroborates (0.60) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 106
• French Treasury guarantees unlimited convertibility by lending money to franc zone central banks #qualifies (0.55) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 99
• Fixed parity and credit compression make France the zone’s privileged creditor #corroborates (0.45) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 252