Conflicts and Geopolitics Reshape the World’s Currencies

Regional conflicts, rampant inflation, national debt crises, and the resurgence of monetary sovereignty are all contributing to the reshaping of the world’s currencies.

CFA Franc could lose half its members

The President of Senegal, elected in February 2020, has announced plans to withdraw from the CFA franc.

The CFA franc is the name of not one but two currencies: the West African CFA franc (XOF) used by Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo, and the Central African CFA (XAF) used by Cameroon, Chad, Central African Republic, Congo Republic, Equatorial Guinea and Gabon.

Both currencies are pegged to the euro with an exchange rate of XOF/XAF 655 = € 

1. France guarantees the peg. Counterpart members are required to hold half of their foreign reserves with the Banque de France, and a French official sits on the board of both central banks. In 2019, both conditions were dropped for the West African Monetary Union, and a name change from CFA to Eco was announced. However, no progress has been made about the new name.