CFA Franc
The CFA franc is the name shared by two separate currencies used by fourteen African countries: the West African CFA franc (XOF) and the Central African CFA franc (XAF). Both are pegged to the euro at the same rate but are issued by different central banks.
Also called: XOF · XAF · West African CFA franc · Central African CFA franc · franc CFA
XOF is issued by the BCEAO for the eight members of the West African Economic and Monetary Union: Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. XAF is issued by the BEAC for the six members of CEMAC: Cameroon, the Central African Republic, Chad, the Republic of the Congo, Equatorial Guinea and Gabon.
Both are fixed at 655.957 CFA francs to one euro, and France's Treasury guarantees their convertibility into euros. The arrangement dates from 1945. It has delivered lower inflation than most of the region, at the price of an exchange rate the member states cannot adjust on their own and a long-running argument about monetary sovereignty.
The two currencies are not interchangeable in practice. They sit in different regulatory, banking and settlement systems, with different exchange-control rules and different correspondent networks. A payment into Senegal is an XOF question and a payment into Cameroon is an XAF question, even though the peg is identical.
In practice
Guaranteed convertibility at a fixed rate does not mean money moves freely. Both zones apply documentation and repatriation rules, and the Central African zone in particular has tightened them to rebuild reserves.
See also
- BCEAOThe BCEAO, the Central Bank of West African States, is the single central bank of the eight countries of the West African Economic and Monetary Union. It issues the West African CFA franc (XOF) and regulates banks, payment systems and e-money across the union.
- BEACThe BEAC, the Bank of Central African States, is the single central bank of the six countries of the Central African Economic and Monetary Community (CEMAC). It issues the Central African CFA franc (XAF) and enforces the zone's foreign exchange regulations.
- Currency PegA currency peg is a policy under which a central bank fixes its currency's exchange rate to another currency or a basket and stands ready to buy and sell at that rate. The peg lasts only as long as the reserves and credibility behind it.
- Currency ConvertibilityCurrency convertibility is the ability to exchange a currency for foreign currency without official restriction. A currency may be convertible for trade payments but restricted for investment flows, and a legal right to convert does not guarantee the foreign currency is available.
- Export Proceeds RepatriationExport proceeds repatriation is a rule requiring exporters to bring their foreign-currency earnings back into the country within a set period, and often to sell some or all of them to local banks or the central bank for local currency.
- Exotic CurrencyAn exotic currency is one that trades thinly — wide spreads, limited market depth, few willing counterparties, and often restrictions on converting or moving it. The label is about liquidity and tradability, not about geography or how unfamiliar the country is.