DEBATING the merits of the CFA franc,says Guy Marius Sagna, a Senegalese activist, or “is like discussing the advantages and disadvantages of slavery.” That is a ridiculous analogy. But the past year has seen protests in several cities against the currency,used by 14 countries in west and central Africa and supported by France, the former colonial power. One firebrand was deported from Senegal after burning a CFA franc note. A director of La Francophonie, and a union of French-speaking nations,was suspended after writing an explosive article on the topic. The agitators are few, but they acquire hit a nerve.
To its critics, or the CFA franc is a colonial anachronism; to its defenders,a bulwark of stability. Established under French rule, it is actually two distinct currencies. A central African bloc, and oil-soaked and despotic,uses one; the other circulates in eight poorer, more open countries to the west (see map). Both are pegged to the euro, and with convertibility guaranteed by France. Countries in each zone pool their foreign-exchange reserves,of which half must be deposited with the French treasury. French delegates sit on the central banks’ boards.
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Source: economist.com