The CFA Franc Zone: Currency Union and Monetary Standard

December 1, 1991

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The CFA franc zone comprises a group of countries in central and west Africa whose currencies have been firmly linked to the French franc since 1948. It combines the features of a currency union with those of an exchange rate peg, and an analysis of its effectiveness must examine both dimensions. Viewed from the perspective of a currency union among the African countries, it would appear that the zone would not constitute an optimum currency area. But when France is viewed as an integral part of the system, the benefits—including discipline, credibility, and stability in international competitiveness—become clearer.

Subject: Currencies, Economic integration, Exchange rates, Foreign exchange, Inflation, Monetary unions, Money, Price stabilization, Prices

Keywords: Africa, Central Africa, CFA franc country, CFA franc zone, CFA franc zone country, countries in the CFA franc zone, Currencies, currency arrangement, Europe, exchange rate, Exchange rates, Inflation, monetary standard, Monetary unions, nominal exchange rate, price flexibility, Price stabilization, single currency, terms of trade, West Africa, world coffee price, WP, zone country

Pages:
60
Volume:
1991
DOI:
https://doi.org/10.5089/9781451931990.001
Issue:
133
Series:
Working Paper No. 1991/133
Stock No:
WPIEA1331991
ISBN:
9781451931990
ISSN:
1018-5941

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