Edited by Jan Toporowski and Jo Michell
Chapter 19: The Franc Zone
The Franc Zone consists of fourteen countries in Africa together with the Islamic Federal Republic of the Comoros, who use a currency that was on a currency board with the French Franc, and now with the Euro. The guarantee of convertibility at a fixed rate against the French Franc, and now the Euro, has made those countries unique among developing countries in possessing a convertible currency, along with low inflation. Years before the development of optimal currency area theory, the Zone served as an example of how a monetary union could function, and the disadvantages of such monetary arrangements. However, it is not clear to what extent those disadvantages are consequences of the specific arrangements of the Zone, as opposed to being features of all monetary unions, or to what extent those undesirable features are the effects of other circumstances specific to the countries concerned.
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