West African Monetary Union renames CFA franc, but pegged to Euro

West Africa’s monetary union has agreed with the new France proposal to rename its CFA franc the Eco and cut some of the financial links with Paris that have underpinned the region’s.

Ivory Coast’s President Alassane Ouattara said “this is a historic day for West Africa” during a news conference with French President Emmanuel Macron in the country’s main city Abidjan.

France will no longer have a representative on the board of the central bank, Ouattara told reporters during a two-day visit by French President Emmanuel Macron. The monetary union will move its currency reserve from France, the former colonial power, Outtara said Saturday in Ivory Coast’s commercial capital Abidjan.

Before now, the states had have to keep half of their reserves in France, on which the French treasury pays a 0.75% interest rate. The CFA franc was created on 26 December 1945, along with the CFP franc.

Eight members of the West African Economic and Monetary Union (UEMOA) reached an agreement to use a new common currency called the ECO.

The ECO was the proposed name for the common currency that the West African Monetary Zone (WAMZ) planned to introduce in the framework of the Economic Community of West African States (ECOWAS).

Macron said he hoped the currency reform would lead to a “dynamic regional market.”

“These reforms put an end to a system that has maybe played out it’s role and will hopefully lead to greater regional economic mobility and stability,” Macron said.

The agreement follows talks in Nigeria’s capital Abuja on Saturday between West African leaders. Countries in the CFA bloc and other West African nations such as Nigeria and Ghana have for decades debated creating their own currency to promote regional trade and investment.

However, the changes will only affect the West African form of the currency used by Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo all former French colonies except Guinea Bissau.

The six countries using the Central African CFA are Cameroon, Chad, Central African Republic, Congo Republic, Equatorial Guinea and Gabon, all former French colonies with the exception of Equatorial Guinea.