The West African CFA franc, represented by the currency code XOF, is the official currency used in the eight West African countries that form the West African Economic and Monetary Union (WAEMU): Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal, and Togo. The Central Bank of West African States (BCEAO) issues and manages the West African CFA franc.
The West African CFA franc was introduced in 1945, at the end of World War II, in the French colonies of West Africa. The CFA stands for "Communauté Financière Africaine" (African Financial Community).
Convertible:Yes, but liquidity is extremely poor
Exchange rate regime:Pegged to EUR (historically to the French franc)
BCEAO Monetary Policy
The main objective of the Central Bank of West African States' (BCEAO) monetary policy is to maintain price stability and ensure the external stability of the West African CFA franc. The currency is pegged to the Euro at a fixed exchange rate under a monetary cooperation agreement with the French Treasury.
The BCEAO's monetary policy operations include open market operations, standing facilities, and minimum reserve requirements for banks. Through these instruments, the BCEAO manages liquidity in the banking system and controls inflation.
Key Features of XOF
The West African CFA franc is subdivided into 100 centimes. Coins are issued in denominations of 1, 5, 10, 25, 50, 100, 200, and 500 francs, while banknotes come in denominations of 500, 1,000, 2,000, 5,000, and 10,000 francs.
XOF banknotes feature images that represent the cultural and economic activities of the region. The design also includes advanced security features to prevent counterfeiting.
The West African CFA franc is often discussed among financial experts due to its unique characteristics. The fixed exchange rate with the Euro and the monetary cooperation with France are key points of interest.
While the peg to the Euro provides exchange rate stability and low inflation, some experts argue that it may limit the region's ability to respond to economic shocks and competitiveness issues. The ongoing debate about the future of the CFA franc system, including proposals for reforms, is a key point of interest for experts.
The BCEAO is responsible for the regulation of the West African CFA franc. It oversees monetary policy, manages foreign exchange reserves, and ensures the stability of the financial system in the WAEMU region.
The BCEAO also implements measures to prevent financial crimes, including robust Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations that financial institutions must comply with.
Key considerations to bear in mind
Payment instructions should contain the beneficiary's IBAN, name, and address.
Payment Processing Time
The time taken for a payment to reach the recipient's bank account can vary. Domestic transfers within West Africa are typically processed quickly, while international transfers may take a few business days. Consider the processing time when planning your payment to ensure timely delivery. The iBanFirst Payment Tracker can help you track those payments, and ensure a smooth and efficient payment experience.
Fees and Charges
Banks and financial institutions may apply fees and charges when processing international payments. These fees can vary, so it is advisable to check with your bank to understand the charges associated with your transaction. Check out iBanFirst’s Savings Calculator to estimate how much you could save on your next international payment.
New Year's Day
Dates vary from country to country
iBanFirst S.A. is duly authorised and regulated by the National Bank of Belgium (under CBE number 0849.872.824) as a payment institution. It is a direct member of the SWIFT network and is certified to make payments throughout the SEPA zone. As a payment institution, iBanFirst S.A. only offers hedging solutions (forward, flexible forward and dynamic forward) connected to underlying payment transactions. iBanFirst S.A. does not offer options or any other financial instruments for investment or speculative purposes.