Evolution of ECO

Courtesy of BBC World News:

Eight West African countries have agreed to cut some of their financial links with France in a move which will see the end of a currency known as the CFA franc. Under the deal a new currency called the eco is to be launched. It will still be linked to the euro. The decision was announced on Saturday during the visit of French President Emmanuel Macron to the region. For many people living in West Africa using the CFA franc in shops or markets has been a daily reminder of the lingering colonial link with France. Critics said the system enabled France to benefit long after the blue, white and red flags were lowered at independence especially as it could easily access the region's mineral wealth. Whilst there has long been a campaign to ditch the currency, which has been in use since just after World War Two, some economists argued that the CFA franc did provide a degree of financial stability. Being pegged to the old French franc and then the Euro helped the seven former French colonies and Guinea Bissau to keep inflation down and avoid the prospect of Zimbabwean style financial meltdown during turbulent times. Ivory Coast's President Alassane Ouattara described the decision to scrap the currency as a historic day for West Africa and other politicians in the region will also celebrate the move. Along with Ivory Coast, the decision affects Benin, Burkina Faso, Guinea-Bissau, Mali, Niger, Senegal and Togo. In a few months’ time these countries plan to have a new currency. Although it will still be pegged to the Euro, the African countries using it will no longer be forced to keep half of their reserves in the French treasury in Paris. The vast majority of people living in the eight countries are under the age of 30. So they may be less willing to listen to the politicians who see this move as cutting a colonial link. They will judge its success purely on whether it leaves them wealthier.

Source: https://www.bbc.com/news/topics/cnx753jej07t/senegal

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