Management of The CFA Franc: What are the Fundamentals of the Real Exchange Rate in West African Economic and Monetary Union (WAEMU)?

The objective of our work is to provide an answer to the question of whether or not to link ECO to EURO. For this, we assume that CFA franc is constantly misaligned. Based on WAEMU’s equation of the real exchange rate estimated, we obtain the series of the real exchange rate of balance and the level of misalignment through the HP approach. We use annual WAEMU data for the period 1980-2017 from the World Bank, the International Monetary Fund and the Central Bank of West African States. This result questions the effectiveness of a fixed stowage of the new currency, the ECO to the EURO. However, before the adoption of this new currency, the evaluation of the position of exchange reserves in ECOWAS is necessary. In addition, strengthening productive capacity and better coordination of macroeconomic policies within the ECOWAS economies is highly recommended. It would also be wise to reconsider the budgetary management of ECOWAS states member in order to achieving more convergence.

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Reform of West African currency is some way off

Emerald Expert Briefings ◽

10.1108/oxan-db245383 ◽

2019 ◽

Keyword(s):

Monetary Union ◽

West African ◽

Equatorial Guinea ◽

Economic And Monetary Union ◽

Regional Government ◽

The West ◽

Content Type ◽

Macroeconomic Instability ◽

Cfa Zone ◽

Cfa Franc

Subject West African franc. Significance Despite apparent growing domestic opposition to the CFA franc in recent years, regional government efforts to defend its integrity have increased, particularly among the Central African Economic and Monetary Community countries (CEMAC). On the West African Economic and Monetary Union (WAEMU) side, an uptick in the volume and issuers of Eurobonds has increased dependence on the key feature of the CFA franc -- its unlimited convertibility to euros guaranteed by the French Treasury. Impacts Complacency among WAEMU countries could replace macroeconomic instability in CEMAC as the main threat to the CFA franc. As the sole CEMAC country without an IMF package, Equatorial Guinea will come under growing pressure to finalise negotiations for one soon. Greater progress towards macroeconomic convergence in the CFA zone will shield its members from the proposed ECOWAS ‘Eco’ zone.

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Fundamentals of the Real Exchange Rate of the CFA Franc in WAEMU: An Application of Non-Stationary Panel Data Econometrics

SSRN Electronic Journal ◽

10.2139/ssrn.3095643 ◽

2018 ◽

Author(s):

Kwami Ossadzifo Wonyra

Keyword(s):

Exchange Rate ◽

Panel Data ◽

Real Exchange Rate ◽

The Real ◽

Panel Data Econometrics ◽

Cfa Franc

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Foreign aid inflows and the real exchange rate in the CFA Franc zone

Économie internationale ◽

10.3917/ecoi.116.0037 ◽

2009 ◽

Vol n° 116 (4) ◽

pp. 37-51

Author(s):

Bazoumana Ouattara ◽

Eric Strobl

Keyword(s):

Exchange Rate ◽

Foreign Aid ◽

Real Exchange Rate ◽

Franc Zone ◽

The Real ◽

Cfa Franc Zone ◽

Cfa Franc

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Mixed exchange rate regime in the West African Economic and Monetary Union (WAEMU)

Journal of Economics and International Finance ◽

10.5897/jeif11.107 ◽

2011 ◽

Vol 3 (16) ◽

Author(s):

Ibrahima Thiam

Keyword(s):

Exchange Rate ◽

Monetary Union ◽

Exchange Rate Regime ◽

West African ◽

Economic And Monetary Union ◽

The West

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Influence of Real Exchange Rate on the Finance-Growth Nexus in the West African Region

Economies ◽

10.3390/economies7010023 ◽

2019 ◽

Vol 7 (1) ◽

pp. 23 ◽

Cited By ~ 8

Author(s):

Kizito Ehigiamusoe ◽

Hooi Lean

Keyword(s):

Economic Growth ◽

Exchange Rate ◽

Real Exchange Rate ◽

Financial Development ◽

Real Exchange Rates ◽

West African ◽

African Region ◽

The Real ◽

West African Region ◽

Finance Growth Nexus

This study examines the moderating effects of the real exchange rate and its volatility on the finance-growth nexus in the West African region. It also determines the marginal effects of financial development on economic growth at various levels of the real exchange rates and its volatility. The findings show that financial development has a long-term positive impact on economic growth, but this impact is weakened by real exchange rate and its volatility. The marginal effects of financial development on economic growth vary with the levels of the real exchange rate and its volatility. The higher the real exchange rate and its volatility, the less finance spurs growth. We also provide evidence of this scenario in individual specific countries in the region. The implication of this study is that the development of the financial sector would not provide the desirable economic benefits except it is accompanied by a reduction and stability in the real exchange rates. Based on the findings, the study makes some policy recommendations.

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