CFP Franc (XPF)

What Is the CFP Franc (XPF)?

The CFP franc (XPF) is the official currency of four French overseas island collectivities: French Polynesia, New Caledonia, Wallis, and Futuna. The currency was introduced in 1945 to protect the colonies from the post-Second World War devaluation of the French franc and is subdivided into 100 centimes.

The XPF, the ISO currency code of the CPF franc, is pegged to the euro. As a result, the XPF fluctuates when it is compared against the United States Dollar (USD).

Understanding the CFP Franc (XPF)

CFP stands for Central Pacific franc and is also known as the “franc Pacifique,” due to its use in the Pacific Ocean region known as French Polynesia. The currency symbol for XPF is F and bills are denominated in 500, 1,000, 5,000, and 10,000 increments, while coins are minted in 1, 2, 5, 10, 20, 50, and 100 increments.

Paris-based Institut d'émission d'Outre-Mer (IEOM) issues the XPF. Initially, the CFP franc had a fixed exchange rate with the U.S. dollar (USD), which played a significant role in the economies of the French Pacific territories’ after World War II. In 1949, the CFP franc changed to have a fixed exchange rate with the French franc (F).

When France transitioned to the euro, so too did the XPF peg. Currently, the CFP franc is pegged to the euro, with the 10,000 F, the highest denominated CFP note, being equal to 83.8 euros.

The CFP franc is one of two currencies that France introduced after the Second World War to combat the weakness of the French franc. The other money issued at this time was the West African CFA franc (XOF). The Central Bank of West African States located in Dakar, Senegal, now regulates the West African CFA franc, as well as the West African Economic and Monetary Union, which includes Benin, Burkina Fasso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Sénégal, and Togo. 

History of the CFP Franc (XPF)

After the economic turmoil of the Second World War, France, and other nations ratified the Bretton Woods Agreement. The Agreement forced the devaluation of many currencies, including the French franc. The document also stipulated the pegging of the French franc to the U.S. dollar. To spare the French colonies from the impact of the massive devaluation, France created two new independent currencies, the West African CFA (XOF) and the Polynesian CFP Franc (XPF). 

At first, there were three distinct forms of the currency for French Polynesia, New Caledonia, and the New Hebrides, respectively, with Wallis and Futuna using the New Caledonian franc. Now all banknotes are identical, with one side exhibiting landscapes or historical figures of French Polynesia and the other side displaying landscapes or historical figures of New Caledonia.

There are still two sets of coins, however. From New Caledonia to French Polynesia, one side of the coins remains the same, while the reverse side will vary, appearing with either the name Nouvelle-Calédonie (New Caledonia, Wallis, and Futuna) or the name Polynésie Française (French Polynesia).

Special Considerations

The CFP is a part of a currency union. A currency union is where two or more countries or economies share a currency. The most famous of these unions, and the largest, is the Eurozone. A currency union is distinguished from a full-on economic and monetary union in the sense that although they share a common currency, there may not be additional integration between countries.

The CFP unites the currencies under the union by pegging them all to the euro. Currency unions are typically used to facilitate trade and to strengthen the economies of the countries involved.

The Bottom Line

The Central Pacific franc (CFP) is a currency shared between multiple countries. It is pegged to the euro so it follows that currency's value in international markets. The CFP was brought into existence as a currency by France in order to prevent further devaluation caused by an agreement signed after World War II.