Another Example of a Partially Unwound Currency Union—the CFA Franc

West African CFA francs

Photograph via Wikimedia Commons.

Searching yesterday for an example of a currency union that managed to survive despite the departure of one or more members, we came up with the midcentury “Sterling Bloc” of countries that either used British Pounds or pegged their currency to the pound. Another example, still in effect today, turns out to be the CFA franc.

Back when France was getting itself plugged in to the Bretton Woods System it created a currency for its African colonies called the CFA franc that would be guaranteed by the French treasury to be convertible into French francs at a fixed rate. This was actually implemented as two separate currencies, a West African CFA franc and a Central African CFA franc, but both have an identical value and an indentical guarantee and in practice the money circulates freely. At any rate, as Francophone Africa moved toward independence, many countries in the region have kept using the CFA franc. But Guinea left in 1960 and Mali left in 1962 (only to rejoin in 1984) without causing unraveling. Indeed, the CFA and the French convertibilty guarantee have even managed to survive France’s conversion to the euro.