Operations account with the French Treasury

The operations account is the account each franc-zone central bank has held with the French Treasury, as the counterpart of the CFA franc convertibility guarantee. On December 21, 2019, in Abidjan, Alassane Ouattara and Emmanuel Macron announced the reform of monetary cooperation between France and WAEMU (West African Economic and Monetary Union): the BCEAO (Central Bank of West African States) would no longer have to deposit half of its foreign exchange reserves with the French Treasury, and France would withdraw its representatives from the central bank's governing bodies. The operations account was the piece that announcement targeted. Each franc-zone central bank held an account with the French Treasury, on which it could draw without limit to obtain euros; the BCEAO's account was closed in April 2021. That is the mechanism of the unlimited convertibility guarantee: in exchange, the old regime required a fixed share of foreign exchange reserves to be pooled in that account, most recently fifty percent, and gave France seats on boards and committees. The operations account earns interest and can go into overdraft, which happened in the years leading up to the 1994 devaluation. For WAEMU, the 2019 agreement keeps the fixed parity and the guarantee but removes the deposit requirement and the French presence in governance, with an appointed independent figure still sitting on the monetary policy committee. CEMAC (Economic and Monetary Community of Central Africa), for its part, stayed under the old regime: the BEAC (Bank of Central African States) still deposits a share of its reserves with the French Treasury. For an underwriter, the operations account is the reason franc-zone inconvertibility risk is not rated like that of a stand-alone currency. The guarantee has a limit practitioners know well: it is a political commitment between states, revisable by agreement, and a reform can change its terms. Tracking the eco serves precisely to find out whether the guarantee will survive the change of name.