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The 1992-93 EMS Crisis and the South: Lessons from the Franc Zone System and the 1994 CFA Franc Devaluation

Author

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  • Rodrigue Dossou-Cadja

    (Sapienza University of Rome, EHESS, PSE)

Abstract

The CFA franc devaluation on 11 January 1994 stands out as the most significant reform within the Franc Zone system since political independences of former African French colonies in 1960, yet a topic shrouded into profound taboo. So far, the economic literature has failed to draw any connection between this pivotal event in African macroeconomic history and its historical context: the 1992-3 European Monetary System (EMS) crisis. Using the narrative approach coupled with quantitative analysis (DCC-MGARH-X and SVARs) and powered by an unprecedented set of archival data from the Banque de France, the Bank of England, and the Bundesbank (the latter two from Eichengreen and Naef, 2022), as well as the International Monetary Fund (IMF), we document a brand-new route on understanding a certain integrated African-European common history. Evidence unveils the CFA franc devaluation as a fundamental role player in backing up credibility of the French franc amidst the 1992-3 EMS crisis. A ‘new democratic Franc Zone's Transition Committee' at the Banque de France, appears as a key feature for the future of the Zone’s management.

Suggested Citation

  • Rodrigue Dossou-Cadja, 2024. "The 1992-93 EMS Crisis and the South: Lessons from the Franc Zone System and the 1994 CFA Franc Devaluation," Working Papers 0246, European Historical Economics Society (EHES).
    • Handle: RePEc:hes:wpaper:0246
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    References listed on IDEAS

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    More about this item

    Keywords

    CFA franc devaluation; Franc Zone; European Monetary System; Currency crisis; Political Independences; Narrative approach;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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