How to phase out F CFA and set up a new currency in West Cameroon
I am writing this post first as a request by Mark Bareta, one of the Interim Leaders of the Consortium for a guide to phase out F CFA in West Cameroon and to set up a new currency in circulation in West Cameroon.
In summary, it is a 3 step process – phasing out F CFA by replacing it with a basket of currencies (GBP, USD & NGN), converting foreign reserves into GOLD & phasing out the basket of currencies by introducing the new currency of the new sovereign state.
Phasing out F CFA by replacing with a basket of currencies (GBP, USD & NGN)
Why not a single currency, why a basket of currencies? So as to spread out the risk, and give room for us to watch the operation of different currency price points that may guide the final design of our new currency.
At the moment, border towns like Akwaya, Bamusso etc are already using NGN in exchange since they do more business with Nigeria than the rest of Cameroon. Though this operation isn’t about phasing out F CFA in those towns, it provides a working model on how we can forge ahead with such an operation.
To start, we have to start by setting up exchange houses whose sole purpose is the exchange of F CFA to the basket of currencies and communicate on a daily basis the exchange rate, rates for common commodities in the respective dominant currencies.
For this operation to be effective, the network of exchange houses will have to be located in all the major towns, and its headquarters in a city with proximity for international commerce. The main job of the headquarters will be to buy GBP, USD & NGN with F CFA, then push the basket of currencies to the local exchange houses. At the local exchange houses, they shall actively exchange F CFA from the population to the basket of currencies.
Converting part of foreign reserves into GOLD
We can’t use a basket of currencies forever. We will have to set up our own currency operations to manage our own money. In order to get a good base for setting up the new currency in circulation, we will need to get a reserve in GOLD. The international monetary system respects gold. Our currency will have its weight only if we have a base in GOLD. In order to get this base in GOLD, we need to convert part of our foreign reserves in GOLD. (more research is needed to give more beef to this).
Phasing out the basket of currencies by introducing our sovereign currency
This is the final stage of the plan. By then, the network of exchange houses must have been converted by part of a network of Central Banking System with the head office becoming the Central Bank. Also, we should have decided on design of the monetary system, and running the minting of our money. The same means of phasing out F CFA will be used to phase out the basket of currencies.
There are so many challenges. I have listed only a few below:
– The role of banks registered in LRC running operations in F CFA.
– Integrating in the international banking community
– How do we use the law to outlaw F CFA in West Cameroon given that we’re not yet the lawmakers?