Making sense of west Africa’s new currency

MONETARY POLICY, done well, is meant to put everyone but economists to sleep. Yet in west Africa it has pulled thousands of protesters onto the streets. Many locals have long objected to the west African and central African CFA francs, two monetary unions pegged to the euro and backed by France. This arrangement has delivered low inflation and currency stability to the 14 African countries that use one or other of the CFA francs. But critics call the CFA a relic of past subjugation and absurdly portray it as a “colonial tax” imposed by France, the former power.

On December 21st those calling for an end to the CFA franc mostly got their way. Emmanuel Macron and Alassane Ouattara, the presidents of France and Ivory Coast, announced the most far-reaching changes to the currency area since its formation in 1945. The west African CFA franc, which is used by eight countries, will be ditched in 2020 and replaced by the eco, which will have far looser ties to France. The central African CFA franc is unchanged, but many expect the six countries using it to implement similar reforms.