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by haliou
4177 days ago
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My first post on HN :)
I'm not sure the situation is a simple as the author implies.
It is true that when the French left Guinea in 1958 they took everything with them. Eventually Guinea turned to communist Russia with even greater consequences. The author claims "Right for France to pre-deploy troops and intervene military in the country to defend its interests". This is not true as it's a defence agreement against external aggression, not internal civil war. For example they did not intervene for any side during the 2002-2004 civil war in the Ivory Coast. The usage of Franc CFA is actually beneficial to those using the currency as it's value is pegged to the Euro, hence helping to control inflation. I do not dispute the facts that Africans countries ought to be more autonomous (after all that's what independence is), but this stems more from a failure from Africans politicians than anyone else. |
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The merits of pegging local currencies in such a way are very doubtful. Across the whole eurozone, today, this issue is hotly contested by activists stating that this rigidity penalizes poorer countries, because their lower-quality wares cannot use currency devaluation as a competitive weapon anymore. Countries using the Franc CFA might be experiencing the same problem... Also, Argentina started its bankrupting spiral when its currency was artificially pegged to the US Dollar without really having the commercial and political power to sustain such link in the long run.
A monetary policy is not just about "keeping inflation low" -- in fact, inflation and currency devaluation in many cases are necessary corrections.