DEFINITION of 'ADF (Andorran Franc)'
ADF was a symbol for the Andorran franc, formerly the currency of Andorra, a small nation between the borders of France and Spain. The term Andorran franc referred to French francs that circulated in Andorra, as no Andorran franc coins or notes were ever issued. In 1999, the euro replaced the French franc, and therefore the Andorran franc, as the national currency of Andorra.
BREAKING DOWN 'ADF (Andorran Franc)'
Through most of the 20th century, the French franc was the de facto currency used in Andorra. In addition, the Spanish peseta and many other currencies were widely accepted. In 1999, the euro replaced the French franc and the Spanish peseta when France and Spain joined the European monetary union. Therefore, the euro became the de facto currency of Andorra. At the time this happened, the French and Andorran franc was worth one-eighth what it had been worth in 1960.
In addition to the currency symbol ADF used in foreign exchange markets, other currency symbols were sometimes used for the Andorran franc, including _, FF and F. Some of the currency's nicknames included balle, bâton, patate, plaque and brique. As it was in French francs when in physical form, the Andorran franc's denomination was identical to the French franc.
A Waning Tax Haven
In 2016, despite the fact Andorra never joined the European Union (EU), the euro is widely used in the country. The nation is widely considered a tax haven, with strong banking privacy laws and low regulation. The nation's status as an international tax haven contributes a large financial sector where many currencies are widely accepted, including the British pound, U.S. dollar and Swiss franc. Notably, despite the importance of Andorra's financial sector, the nation lacks a stock exchange.
In the late 20th and early 21st centuries, Andorra took various steps to increase ties with its neighbors and diversify its economy. It entered into customs agreements with the EU and joined the United Nations (UN). It cooperated more fully with international bodies, agreeing to work with the Organization for Economic Co-operation and Development (OECD) and EU on bank secrecy matters. These actions placed some pressure on the financial sector and the Andorran economy generally.
Despite some success in diversifying its export market, Andorra's declines in the nation's tourism and finance industries, as well as slower growth in Spain and France after 2010, led to a public financial crisis, and GDP contracted. Severe austerity measures were undertaken to reduce the budget deficit. To further diversify its economy, the government took measures in 2012 to open up more domestic investment to foreign capital.