The West African Economic and Monetary Union has agreed with France to a number of changes to the CFA franc currency, including a new name, Ivory Coast's President Alassane Ouattara said Saturday, as the West African bloc inches closer to a split from the French-backed currency.
The monetary union will move its currency reserve from France, the former colonial power, Outtara said Saturday in Ivory Coast's commercial capital 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.
'Source of Prosperity'
"This decision shows our determination to create an integrated regional market, dynamic and a source of prosperity for us and for future generations," Ouattara said.
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 CFA franc is used in two African monetary zones, one for eight West African countries and the other for six, mostly petrostates, in Central Africa. In return, the states had have to keep half of their reserves in France, on which the French treasury pays a 0.75% interest rate. That requirement will be scrapped for the West African zone when it transitions to the new currency, to be dubbed the eco, Ouattara said.
A strong supporter of the French-backed currency, Ouattara said he hoped the reforms would allow the countries to "consolidate our dynamic growth, increase the buying power of the population and address issues including introducing the single currency".
France will continue to wield influence, though. The eco will be pegged to the euro and France will "guarantee its economic stability", Macron said.
Ivory Coast, with an economy of about $40bn, is the biggest among the users of the CFA franc in West Africa.
The CFA franc continues as the currency in the Central African monetary zone for now, but the West African heads of state hope ultimately to create a monetary union with a single currency across all the states that currently use the CFA franc.
The system is facing questions about France’s ongoing role in Africa, with opponents saying it prevents countries from devaluing to counter external shocks and from managing inflation, and has also hampered trade.
"In an increasingly global market, where Ivory Coast trades with a range of countries, including China, Russia and the US, the CFA franc doesn't have a place," Mamadou Koulibaly, a former finance minister and a candidate in Ivory Coast's 2020 presidential election, said last month.
Benin's President Patrice Talon in November called for Francophone nations in West Africa to move some reserves from France in order to have more control over the management of their currency.
"Psychologically, with regards to the vision of sovereignty and managing your own money, it's not good that this model continues," Talon said.