Abstract: | Twelve African countries (former French colonies) share a common currency, the C.F.A. franc, which is freely convertible into the French franc at a fixed rate of echange. The advantages of this entire monetary arrangement are: domestic monetary stability in the African states (no balance-of-payments fluctuations) and accumulation of fairly modest international reserves. The disadvantages are: the devaluation of the C.F.A. franc when the French franc devaluates and the fixed exchange rate. This last point is one of principal targets of criticism today. Notes. |