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. Currency

    A generally accepted form of money, including coins and paper ...
  3. Central Bank

    The entity responsible for overseeing the monetary system for ...
  4. Fixed Exchange Rate

    A country's exchange rate regime under which the government or ...
  5. Bretton Woods Agreement

    A landmark system for monetary and exchange rate management established ...
  6. Pegging

    1. A method of stabilizing a country's currency by fixing its ...
Related Articles
  1. Forex Education

    Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.
  2. Forex Education

    The Pros And Cons Of A Pegged Exchange Rate

    A pegged currency can give a country many advantages, but these advantages come at a price.
  3. Forex Education

    Dual And Multiple Exchange Rates 101

    Why would a country choose to implement dual or multiple exchange rates? It's risky, but it can work.
  4. Chart Advisor

    Use This ETF To Trade The Swiss Franc

    Traders were stunned last week when the Swiss National Bank removed the currency peg that tied the value of the Swiss franc to the euro.
  5. Economics

    Sanctions & Falling Oil Prices Hit Ruble Hard

    Russia, through its aggressive actions, has brought upon itself sanctions which, coupled with falling oil prices, have adversely impacted its economy.
  6. Economics

    What is the difference between a nation's current account deficit and its currency valuation?

    Learn the respective meanings of the two terms, current account deficit and currency valuation, and understand the relationship between them.
  7. Forex Strategies

    How do I use the Haurlan Index to create a forex trading strategy?

    See how the three components of the Haurlan index can be used by forex traders to assess the strength of buyers and sellers for a currency pair.
  8. Forex

    Bitcoin's Main Stumbling Block: Navigating The Law

    Coders created Bitcoin to be decentralized and independent of governments and banks. Authorities are still struggling to create a legal framework.
  9. Investing Basics

    The Most Popular Bitcoin Mining Software

    Success at mining bitcoins depends on the combination of time, knowledge, computer hardware and the complementary software.
  10. Forex Education

    Who are cambrists and how do I become one?

    Discover what a cambrist is, why they are important to exchange markets and what skills you should possess if you are interested in becoming one.

You May Also Like

Hot Definitions
  1. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  2. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  3. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  5. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  6. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
Trading Center