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Updated: May 13, 2025
The price of gold was no longer fixed and token coins were no more convertible. The East African Currency Area is a fairly recent debacle. An equivalent experiment, involving the CFA franc, is still going on in the Francophile part of Africa. Misplaced imperial pride coupled with outmoded strategic thinking led the British to infuse these emerging economies with inordinate amounts of money.
There are mounting pressures by some members to devalue the common currency. Others sternly resist it. Many of the prospective members of this union fancy the CFA franc even less than the EU fancies their capricious and graft-ridden economies. But an ECOWAS monetary union could constitute a serious and more economically coherent alternative to the CFA franc zone.
The CFA franc zone is remarkably diverse ethnically, lingually, culturally, politically, and economically. The euro has indirectly affected the CFA as well. "The Economist" reported recently a shortage of small denomination CFA franc notes. But this is the minor problem. The CFA franc is at risk due to internal imbalances among the economies of the zone. Their growth rates differ markedly.
Another, perhaps equally successful, and still on-going union is the CFA franc Zone. It is pegged to the French franc. Foreign reserves must always equal 20% of short term deposits in commercial banks. All this made the CFA an attractive option in the colonies even after they attained independence.
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