CFA Franc

AAA

DEFINITION of 'CFA Franc'

One of two African regional currencies backed by the French treasury, and pegged to the euro. CFA franc can refer to two either the Central African CFA franc or the West African CFA franc. Although they are separate currencies, the two are effectively interchangeable as they have the same monetary value against other currencies. However, they could theoretically have different values if France decides it.


"CFA" has had a few meanings over the years. Between 1945 and 1958 CFA stood for "colonies françaises d'Afrique", referring to former African colonies of France. Between 1958 and the independence of the nations using the CFA in the early 1960s stood for "communauté françaises d'Afrique" (French Community of Africa). Finally after independence and to this day it stands for "Communauté financière d'Afrique" (African Financial Community).

INVESTOPEDIA EXPLAINS 'CFA Franc'

The CFA franc was created in 1945 following the end of the Second World War. Previously, French colonies had their currencies pegged to the French franc, but the Bretton Woods Agreement ratified in 1945 had the French franc pegged to the dollar, devaluing the French Franc. By creating a new currency, the CFA Franc, France was able to avoid devaluating currencies in its colonies.

RELATED TERMS
  1. Bosnia-Herzegovina Convertible ...

    The currency of Bosnia and Herzegovina. The Bosnia-Herzegovina ...
  2. Central Bank

    The entity responsible for overseeing the monetary system for ...
  3. Currency

    A generally accepted form of money, including coins and paper ...
  4. Pegging

    1. A method of stabilizing a country's currency by fixing its ...
  5. Bretton Woods Agreement

    A landmark system for monetary and exchange rate management established ...
  6. Fixed Exchange Rate

    A country's exchange rate regime under which the government or ...
Related Articles
  1. Currency Exchange: Floating Rate Vs. ...
    Forex Education

    Currency Exchange: Floating Rate Vs. ...

  2. The Pros And Cons Of A Pegged Exchange ...
    Forex Education

    The Pros And Cons Of A Pegged Exchange ...

  3. Dual And Multiple Exchange Rates 101
    Forex Education

    Dual And Multiple Exchange Rates 101

  4. What Is Bitcoin's Intrinsic Value?
    Economics

    What Is Bitcoin's Intrinsic Value?

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center