Franc Zone: Officials talk change , but statusquo remains

The press conference that ended the Ministers of Finance’s meeting in Yaounde, Saturday, April 09, left reporters on a fix.

All the questions asked by reporters during the press conference moderated by Cameroon’s Minister of finance, Alamine Ousmane Mey, at the end of the Ministers of Finance meeting of the Franc zone received answers but the question remains whether or not the answers really tied with the expectations of pressmen. This explains why reporters were obliged to come back on some questions to try to force out answers that may satisfy their audience.

In azll, six officials were on hand to clarify issues. These included; Michel Sapin, French Minister of Finance and Account; Francois Villeroy de Galhau, Governor of the Bank of France; Tiémoko Meyliet Koné, Governor of the Central Bank of West African States (BCEAO); and Lucas Abaga Nchama, Governor of the Bank of Central African States (BEAC) with Alamine Ousmane Mey, as moderator.

Inter-changeability of the CFA

Why would someone with the CFA from the Central African sub region not freely change or use the same currency in West Africa which equally has the CFA as its currency? This is is an age-old question which has never had any convincing response from the officials of the two central banks.

On what is really blocking the common use of the two CFA in the Franc zone, Governor Tiémoko said they have worked on it at the level of the two central banks but that the new economic dispensation and what he described as the risk involved made them to be more cautious. He however assured that they are working on several aspects in connection with the problem. “The mechanism will be put in place very soon”, he said.

In the same vein, the Governor of BEAC said their interest is to come out with a modern system that will avoid a situation where people will be travelling with huge sums in their wallets. This system will equally scale down possibilities of financing terrorist activities, he said. In other words, the whole idea of changing the two CFAs is retained and its only a question of time.

Independence of the CFA

The French Minister of Finance and Account, expressed surprised at the question whether or not France cannot liberate the CFA. “We cannot be freeing a currency that is free”, he replied, stating that his country has never had any intension of pinning down the CFA. France, according to him is out to ensure stability as well as convertibility. This explains why France is guaranteeing this convertibility through the famous “Account of Operations”.

This system of monetary operation has played to the advantage of countries of the Franc zone in the face of any economic crisis. “We are talking about guaranteeing monetary stability which enables such countries to bounce back easily during crisis”, he said. To the Governor of the Bank of France, the majority of African countries seem to have preferred to maintain the existence of the Franc zone.

Account of Operations

The continuous existence of the Account of Operations in the Paris Bank remains a subject of controversy. As to whether part of the money or reserves blocked in the Paris Bank cannot be liberated at this time that countries of the Franc zone are undergoing the shocks of the drop in the price of extractive raw material, the Governor of the Bank of France refused to see it as a real issue.

The Account of Operations, he said, is not a financing mechanism that is favourable to France or the Euro zone but a guarantee. He dismissed fears on the remuneration accruing from it, stating that it is sensibly higher than the interest rate in the Euro zone.

Disappearance of the French Franc

Pressmen continue to question why the French Franc which served as backing for the CFA should disappear and the latter continue to exist. This, they questioned has played to the disadvantage of the CFA imposing a rather fixed exchange rate to the Euro. “No participant raised the issue of exchange rate and if it was not raised, it means it is not an issue”, Francois Villeroy de Galhau said. To the French Minister of Finance, the main problem now is how to mobilise revenue in the face of the present economic dispensation.