Political sketch
Independent from France on 6 July 1975.
The Comoros were Arab sultanates when France took possession of the island of Mayotte in 1843. France took possession of the remaining islands in 1886, and all the islands became part of the neighboring colony of Madagascar in 1914. The Comoros became an overseas territory of France in 1947. In 1961, the year after Madagascar became independent, the islands were granted internal autonomy. In 1963 the capital was transferred from Dzaoudi, on Pamanzi (now part of Mayotte), to its present location of Moroni on Grande Comore. In 1974 majorities on three of the four islands voted for independence; the exception was Mayotte (also known locally as Mahoré). When the National Assembly of France held that each island should decide its own status, the Comorian government declared its independence on 6 July 1975. The president was overthrown in a coup on 3 August 1975. In December 1975 France recognized sovereignty for the three islands that had voted for independence, but not for Mayotte. France withdrew all foreign aid from the Comoros. A coup by European mercenaries in May 1978 returned the exiled former president to power. He survived three coup attempts but was assassinated in November 1989. French intervention in the Comoros permitted multiparty presidential elections to be held in 1990, but the country remained unstable, with periodic coups. A separatist movement exists on the island of Anjouan. Vanilla is the largest export.
Wars since 1500
Second World War, 1942 (Vichy French regime with Germany against United Kingdom and other Allied countries); Comorian Rebellion of September 1997.
Convertibility
The French franc zone:
When the First World War began, France imposed a moratorium of payments on all negotiable instruments starting 1 August 1914. The moratorium was subsequently extended by decrees until 1 March 1915. The central bank, the Bank of France, abandoned the gold standard on 5 August 1914, although no official prohibition on exporting gold existed until by a decree of 3 July 1915, affirmed by a law of 15 November 1915. A decree of 2 April 1918 prohibited capital exports without authorization. A law of 25 June 1928 officially restored the gold standard and repealed exchange controls. When the French franc was an object of currency speculation , a law of 13 August 1936 imposed extensive exchange controls, supplementing some lesser measures that had been implemented in 1935.
France imposed exchange controls on 9 September 1939 by a decree of that date, soon after the Second World War broke out. On 20 May 1940, capital controls within the franc zone were greatly relaxed by a French decree of that date. French Equatorial Africa broke from the Vichy French government and sided with the London-based Free French government in August 1940. Exchanges with France were cut off to about September 1944, by which time the Allies had liberated Paris and the main French port cities. Exchange controls within the franc zone were not removed until 6 June 1946. Afterwards, the CFA franc became convertible both for current- and capital-account transactions within the French franc zone (France, Monaco, And French possessions, including countries using the CFA franc). Outside the French franc zone it became convertible for current-account transactions when France resumed current-account convertibility, but it was not convertible for capital-account transactions. France had multiple exchange rates from 26 January 1948 until 17 October 1948, and a dual exchange rate from 18 October 1948 to 29 September 1949. On 20 September 1949 it devalued the French franc and unified the exchange rate, taking advantage of the lead offered by the United Kingdom, which had devalued the pound sterling on 18 September 1949.
The CFA franc zone:
All independent countries belonging to the CFA franc zone except Mali issued laws or decrees stating that effective 1 July 1967, financial relations with foreign countries were in principle free. Madagascar (then called the Malagasy Republic) issued similar legislation on the same date; Mali waited until 29 March 1968. The CFA franc zone countries were following earlier French legislation (France, Law No. 66-1007, 28 December 1966; Decree No. 67-78, 27 January 1967, effective 31 January 1967). France reintroduced exchange controls on 29 May 1968, during a period of strikes and riots (France, Decree No. 68-481, 29 May 1968). It removed controls on 4 September 1968 (France, Decree No. 68-788, 4 September 1968) but reimposed them on 25 November 1968 (France, Decree No. 68-1021, 24 November 1968) before revoking them on 1 January 1969. The CFA franc zone countries, including Madagascar, all strengthened their exchange controls against countries outside the French franc zone in 1968, following France, and loosened them in January 1969. France introduced a dual exchange rate on 21 August 1971 for itself and its French franc zone territories, which excluded Djibouti (France, Ministry of Economy and Finance, Circulaire du 20 août 1971 relative à l'exécution des transferts à destination de l'étranger, 20 August 1971). The CFA franc zone countries, including Madagascar, followed suit on these dates in 1968: Cameroon and Congo-Brazzaville, 28 August; Burkina Faso (then called Upper Volta) and Côte d'Ivoire (Ivory Coast), 30 August; Gabon and Senegal, 31 August; Mauritania, 1 September; Chad, 3 September; Madagascar and Niger, 4 September; Togo, 7 September; Central African Republic, sometime in September; Benin (then called Dahomey) and Mali, 9 September. All except Madagascar and Mauritania abolished the dual market on 21 March 1974, the same day as France (France, Ministry of Economy and Finance, Circulaire du 20 mars 1974 relative à l'exécution des transferts entre la France et l'étranger sur le marché officiel des changes, 20 March 1974). Madagascar had withdrawn from the French franc zone effective 1 July 1973, and its dual market had ended on that date. Mauritania had introduced a new national currency on 29 June 1973 to replace the CFA franc, and its dual market had ended on that date. The dual exchange rate did not apply to transactions within the French franc zone, so purchases and sales of French francs for CFA francs continued to be made at a single rate, the official rate, which was a pegged rate. Certain purchases and sales of currencies outside the French franc zone had to be made at the so-called financial rate, which was a floating rate.
The CFA franc zone central banks suspended convertibility of their currencies into the French franc from 2 August 1993-11 January 1994, resuming on 12 January 1994. When the French franc ended its existence as a separate currency on 1 January 1999, the CFA franc became convertible both for current- and capital-account transactions within the former French franc zone (France and its territories, Monaco, and countries using the CFA franc, including the Comoros), but remained convertible only for current-account transactions with other currencies.
Other
The French government established the CFA franc on 26 December 1945. The CFA franc became the unit of account in French colonies in sub-Saharan Africa and the Americas that had previously used a local franc equal to the French franc. Local francs in North Africa (Algeria, Tunisia, and Morocco) and Djibouti remained in effect fully attached to the French franc. French colonies in the Pacific established a unit of account called the CFP franc, while Indochina, Syria and Lebanon, and Pondicherry (India) already had currencies that were not called francs. The CFA franc enabled the French government to make exchange rate policy in the colonies different from that in France. When making devaluations of the French franc against gold and the US dollar on 26 December 1945 and 17 October 1948, the French government devalued the CFA franc less, implying a revaluation against the French franc. The meaning of "CFA" was initially Colonies Françaises d'Afrique (colonies of France in Africa). In Africa, the meaning changed when the colonies established central banks in preparation for political independence. CFA came to mean Communauté Financière Africaine (African financial community) for the member countries of the Banque Centrale des États de l'Afrique de l'Ouest (BCEAO, opened 4 April 1959). It came to mean Coopération Financière en Afrique Centrale (financial cooperation in Central Africa) for the member countries of the Banque Centrale des États de l'Afrique Équatoriale et du Cameroun (BCEAC, also opened 4 April 1959), which since 22 November 1972 has been called the Banque des États de l'Afrique Centrale (BEAC).
Defaults on or restructurings of debt to the private sector (mainly from Purcell and Kaufman 1993 and Standard & Poor's 2004): None.
Banking crises (data since 1970s mainly from Caprio and Klingebiel 1999 and Frydl 1999): None.
Frankel and Rose (1996) list of currency crashes: 1981.
No exchange rate data in Reinhart and Rogoff (2003).
References
Primary sources:
--Laws and decrees:
Comoros. Gazette. 1960-present. Journal officiel des Comores (1960-1975); Journal officiel--État comorien (1975-present). Moroni.
France. Gazette. 1762-present. Gazette de France (1762-1789); Gazette nationale de France (1789-1799); Bulletin des lois (1791-1831; a separate publication); La gazette nationale ou le moniteur universel (1799-1810); Moniteur universel (1811-1848); Moniteur universel: journal officiel de la République française (1848-1852); Journal officiel de l'Empire français (1852-1870); Journal officiel de la République française (1871-1941); Journal officiel de l'État français (Vichy France, 1941-1944); Bulletin officiel des Forces françaises libres (Free France, 1940-1941); Journal officiel de la France libre (Free France, 1941); Journal officiel de la France combattante (Free France, 1941-1943); Journal officiel du Haut commissariat de France en Afrique (Free France, 1943); Journal officiel du Commandement en chef français en Afrique (Free France, 1943); Journal officiel de la République française (Free France, 1943-1944; France, 1944-present). Paris (1762-1940, 1944-present); Vichy (1940-1944); London (Free France, 1941-1943); Algiers (Free France, 1943-1944): Imprimerie des Journaux Officiels (1944?-present). Many issues are in France, Legifrance Web site (see below).
France. Legifrance Web site, <http://www.legifrance.gouv.fr>. Reference site for French treaties, laws, and decrees, including the full text for recent items.
France. Overseas gazette. 1887-1961. Bulletin officiel (1887-1953; new series, 1953-1959); Bulletin officiel de l'administration provisoire des services du Ministère de la France d'Outre-Mer (1959-1961). Issued by Ministère des Colonies (1887-1950); Ministère de la France d'Outre-Mer (1950-1961). Paris: Imprimerie Nationale.
Madagascar. Gazette. (I am unclear for how long and to what extent, if any, the Madagascar gazette contained material applying to the Comoros and Mayotte. For its bibliographical information, see Madagascar.)
--Publications of monetary authorities:
Banque de France. Annual report. 1800-1925. Assemblée générale des actionnaires de la Banque de France. Paris: Imprimerie de la Banque de France (1800-?); Imprimerie Paul Dupont (?-1925).
Banque de Madagascar. Annual report. 1926?-1950. Comptes rendus. Paris: Banque de Madagascar.
Banque Centrale des Comores. Annual report. 1981-present. Rapport annuel. Moroni: Banque Centrale des Comores.
Banque de Madagascar et des Comores. Annual report. 1951-1974. Conseil d'administration. Assemblée générale ordinaire et assemblée générale extraordinaire du ...; rapport du Conseil d'administration, rapports des commissaires aux comptes, résolutions, bilan de l'exercise (title varies) Paris: Banque de Madagascar et des Comores.
Institut d'Émission des Comores. Annual report. 1977-1980. Rapport annuel. Moroni: Institut d'Émission des Comores.
--Web site of the current monetary authority (viewed 20 September 2005):
Apparently none.
--Other publications or Web sites:
Comité Monétaire de la Zone Franc. Secrétariat. 1953-present. Premier [etc.] rapport annuel du Comité de la zone franc établi en exécution du décret du 5 fevrier 1952 (art. 4, §2) (1953-1956); La zone franc en 1957: cinquième rapport annuel du Comité Monétaire de la Zone Franc (1957); La zone franc en ...: rapport publié par le Secrétariat du Comité Monétaire de la Zone Franc (1958-1983); La zone franc: rapport ...: publié par le Secrétariat du Comité Monétaire de la Zone Franc (1984-1991); La zone franc: rappport annuel ...; publié par le Secrétariat du Comité Monétaire de la Zone Franc (1992-2003; inside page says La zone franc en ...); Rapport annuel de la zone franc (2004-present; inside cover says La zone franc: rapport annuel ...). Paris: Imprimerie Nationale (1953-1956); Secrétariat du Comité Monétaire de la Zone Franc (1957-1991; 1957 is a mimeo with no explicit publication information); Banque de France (1992-present). Recent issues are available on the Web site of the Banque de France, <http://www.banque-france.fr/fr/eurosys/zonefr/zonefr.htm>.
France. Commision de Surveillance des Banques Coloniales. 1875-1939. Rapport au président de la république sur les opérations des banques coloniales d'émission pendant l'exercise ... (1873/1874-1936/1937); Rapport au président de la république sur les opérations des banques coloniales d'émission ... (1927/1929-1936/1937). Paris: Imprimerie Nationale.
Main secondary sources:
Gérardin, Hubert. 1989, 1994. La zone franc. Tome 1: histoire et institutions. Tome 2: La dynamique de l'intégration monétaire et ses contraintes. Paris: Éditions L'Harmattan.
IMF ARER. 1950-present. International Monetary Fund. Annual Report on Exchange Restrictions (1950-1978), Annual Report on Exchange Arrangements and Exchange Restrictions (1979-1988), Exchange Arrangements and Exchange Restrictions: Annual Report (1989-present). Washington: International Monetary Fund. (Contains information on IMF member countries and some of their dependencies.)
Leduc, Michel. 1965. Les institutions monétaires africaines: pays francophones. Paris: Éditions A. Pedone.
Monetary authorities: Comoros
Dates Type Name Source Remarks
April 1926
-31 December 1950 private monopoly issue (as part of a currency union with Madagascar) Banque de Madagascar (headquarters Paris, France) France, law of 22 December 1925 The Comoros became a French protectorate in 1886. French currency began to be used in perhaps 1908. Some coins were struck for the island of Ngazidja in 1889 and used from 1890. The rest of Comoros used French coins, and later coins of Madagascar (Zay 1892: 252-3; Mazard 1953: 151-2, 182). The Banque de Madagascar was created as a note issuer for the Comoros also, although it did not actually open a branch in Moroni until after 1950. I believe there was another bank in the islands before that, but I have found no information on it.
1 January 1951
-31 December 1974 central bank (with majority government ownership and commercial banking functions) (as part of a currency union with Madagascar to 29 June 1963) Banque de Madagascar et des Comores (headquarters Paris, France) France, Law 50-375, 29 March 1950; Decree No. 50-1425, 16 November 1950; Law No. 62-873, 31 July 1962 The government gained majority (56%) ownership in the Banque de Madagascar. Since the 1930s, French policy had been to nationalize note issue; since after the Second World War, there had also been a policy to nationalize banks. The law of 1962 allowed the Banque de Madagascar et des Comores to continue issuing notes in the Comoros after Madagascar began issuing its own currency. From 1 April 1962, such notes were overstamped "Comores." The first modern coins for the whole Comoros archipelago were issued in 1964; they replaced coins for Madagascar that had been used since 1949. France, Decree No. 48-2001, 30 December 1948 authorized coins for Madagascar, includint the Comoros as a dependency; France arrêté of 30 April 1964 established coins for the Comoros alone.
1 January 1975
-30 June 1981 monetary institute Institut d'Émission des Comores (headquarters Paris, France / Moroni, Comoros from 15 July 1977) France, Decree 74-1176, 31 December 1974; Decree 74-1177, 31 December 1974 Established a monetary institute after Madagascar left the CFA franc zone. The headquarters was transferred to Moroni well after the Comoros achieved independence. The statutes of the Institut d'Émission were revised effective 1 September 1977 to reflect the independence of the Comoros (Institut d'Émission des Comores annual report 1977: 34-5). The central bank took over issuance of coins from the French Treasury on 1 June 1975 (France, Decree No. 75-443, 30 May 1975). The Comoros joined the IMF on 21 September 1976. The second bank was perhaps the Société de Credit pour le Développement des Comores (headquarters Moroni, Comoros), created in 1974. Originally owned half by the French Caisse Centrale de Coopération Économique and half by the Comoros government, in June 1977 the Comoros government bought all shares (Institut d'Émission des Comores annual report 1977: 24-5). The Banque de Madagascar et des Comores established a subsidiary called the Banque des Comores in 1974. The Comoros government originally owned 16%, but on 1 January 1978 it became the sole owner, reaming the bank the Banque Nationale des Comores (Institut d'Émission des Comores annua report 1977: 23 bis-24).
1 July 1981
-present (2005) central bank Banque Centrale des Comores (headquarters Moroni, Comoros) France and Comoros, Accord de Coopération Monétaire, 23 November 1979 (ratified in France as Decree No. 83-88, 2 February 1983) Converted the monetary institute into a central bank, as most other CFA franc zone countries had previously done.
Exchange rate arrangements: Comoros
Dates Official arrangement Source Unofficial arrangement, if different Remarks
1908?
-April 1926 fixed; used French franc [to come] Mayotte (Mahoré) became a French protectorate in 1843, and the rest of the Comoros followed in 1886. Widespread use of French currency began in perhaps 1908. Before this period, the Comoros used various foreign coins and a small 1890 issue of local coins. French African colonies admitted British coins and in some instances silver Maria Theresa thalers as legal tender up to the mid 1920s, and perhaps later in some cases. The French franc was a decimal currency.
April 1926
-November 1942 pegged (as part of a currency union with Madagascar); 1 local franc = 1 French franc France, law of 22 December 1925 The Banque de Madagascar was created as a note issuer for the Comoros also. Although it did not actually open a branch in Moroni until after 1950, I count the exchange rate as pegged from the time it opened in Madagascar. Legally, local francs in what was to become the CFA franc zone were not separate from the French franc until 26 December 1945.
November 1942
-7 February 1944 pegged (as part of a currency union with Madagascar); 176.625 local francs = UKŁ1 (and later 43.80 local francs = US$1) Anglo-Free French agreement of 19 March 1941, cited in Mazard (1953: 105) Preserved the prewar exchange rate of the French franc with the pound sterling (and later with the US dollar, when the United States entered the Second World War). France, arrêté of 18 December 1945, for legal purposes declared the period of interruption of communications between France and its colonies as having lasted from 5 November 1942-31 December 1944.
8 February 1944
-5 December 1944 pegged (as part of a currency union with Madagascar); 200 local francs = UKŁ1, or 50 local francs = US$1 Anglo-Free French agreement of 8 February 1944, cited in Mazard (1953: 106) The Anglo-French agreement devalued the French franc slightly to the level already prevailing in other territories under Free French control.
6 December 1944
-25 December 1945 pegged (as part of a currency union with Madagascar); 1 local franc = 1 French franc Anglo-Free French agreement of 8 February 1944, cited in Mazard (1953: 106) Following the liberation of most of France by the Allies during the Second World War, the metropolitan French franc was devalued to the level of the overseas francs under Free French control. Doing so in effect restored the French franc as the anchor currency.
26 December 1945
-16 October 1948 pegged (as part of a currency union with Madagascar); 1 (Madagascar-Comoros) CFA franc = 1.70 French francs France, Decree No. 45-0136, 25 December 1945 France created the CFA franc at a premium from the former 1-to-1 rate of local francs with French franc. The premium offset most of the French franc's devaluation from 50 to 119.10699 French francs = US$1 on 25 December 1945. The revaluation reflected lower wartime economic destruction in the colonies than in France. The new cross rate with the pound sterling was 300 CFA francs = UKŁ1. The name "franc" for the currency came from the French franc. For the meaning of CFA, see the category "Other" in the country information above.
17 October 1948
-31 December 1959 pegged (as part of a currency union with Madagascar); 1 (Madagascar-Comoros) CFA franc = 2 French francs France, Ministry of Finance and Economic Affairs, Avis No. 352 de l'Office des Changes, 17 October 1948 The CFA franc had followed the French franc's devaluation on 26 January 1948, but this time it was in effect revalued against the French franc to offset almost all of the French franc's devaluation from 214.392 to 264 French francs = US$1 on 17 October 1948.
1 January 1960
-29 June 1963 pegged (as part of a currency union with Madagascar); 50 (Madagascar-Comoros) CFA francs = 1 new French franc France, Ordonnance No. 58-1341, 27 December 1958; Ministry of Finance and Economic Affairs, Circulaire du 19 novembre 1959 relative au nouveau franc, 19 November 1959; Decree No. 59-1450, 22 December 1959 France redenominated its franc at 1 new French franc = 100 old French francs.
30 June 1963
-20 August 1971 pegged; 50 (Comoros) CFA francs = 1 new French franc Madagascar, Decree No. 69-397 bis, 30 June 1963, reprinted in Institut d'Émission Malgache annual report 1962/1963: 73 Madagascar created its own franc, in effect separating itself from the Comoros. Madagascar remained within the CFA franc zone, but unlike the Comoros, it no longer used the CFA franc. Notes of the Banque de Madagascar et des Comores not overstamped "Comoros" ceased to be legal tender on 31 December 1964 (France, Decree No. 64-1038, 7 October 1964). The Comoros continued to use old Madagascar coins but also had new coins minted especially for it.
21 August 1971
-20 March 1974 pegged, dual rate; official rate 50 (Comoros) CFA francs = 1 French franc France, Ministry of Economy and Finance, Circulaire du 20 août 1971 relative à l'exécution des transferts à destination de l'étranger, 20 August 1971 The second rate, called the financial rate, was a managed or perhaps independent float. Established a dual exchange rate after France did so 21 August 1971.
21 March 1974
-31 December 1974 pegged; 50 (Comoros) CFA francs = 1 French franc France, Ministry of Economy and Finance, Circulaire du 20 mars 1974 relative à l'exécution des transferts entre la France et l'étranger sur le marché officiel des changes, 20 March 1974 The Comoros and other countries in the CFA franc zone eliminated their dual exchange rates the same day as France.
1 January 1975
-11 January 1994 pegged; 50 Comorian (CFA) francs = 1 French franc France, Decree 74-1176, 31 December 1974 Various issues of World Currency Yearbook list parallel premiums of about 5-20% from 1983-1993. The Comorian franc was established as a separate currency from the CFA franc after Madagascar left the CFA franc zone. The Comoros remained part of the CFA franc zone. Other countries in the CFA franc zone suspended the convertibility of their currencies into the French franc on 2 August 1993. I am guessing that the Comoros followed suit, but I have not been able to see the central bank's annual report for the period.
12 January 1994
-31 December 1998 pegged; 75 Comorian francs = 1 French franc Déclaration commune des chefs d'État et de gouvernement des pays africains membres de la zone UMOA et BEAC, 11 January 1994, in BEAC bulletin, January 1994: 3-4; Banque Centrale des Comores annual report 1994: 12; see also France, Decree No. 94-254, 24 March 1994 The CFA franc was devalued after years of bad credit extended by CFA franc zone central banks to government enterprises depleted foreign reserves. The CFA franc in other parts of Africa was devalued to 100 CFA francs = 1 French franc. The Comoros devalued less because less was thought necessary to restore competitiveness, and its remoteness from the rest of the CFA franc zone made the convenience of preserving the same exchange rate as the rest of the zone a weak argument. The Comoros remained part of the French franc zone.
1 January 1999
-present (2005) pegged; 491.96775 Comorian francs = 1 European euro Banque Centrale des Comores annual report 1998: 8-9, Annexe II The French franc ended its existence as a separate currency, replaced by the European euro. The Comoros and CFA francs switched to the European euro as their anchor, at the prevailing