Political sketch
Formerly Île Bourbon and later Île Bonaparte. Today a French overseas department.
Réunion was uninhabited when Portuguese navigators first visited it in the early 1500s. In the mid 1600s the island was settled and administered by the French East India Company (Compagnie des Indes), which used it and the nearby island of Mauritius as stops on the sea route from Europe to India around the Cape of Good Hope. The island was called Île Bourbon in honor of the French royal family until 1793, when it was renamed Réunion; from 1806 to 1810 it was called Île Bonaparte in honor of Napoleon. Réunion was captured by the British in 1810, during the Napoleonic Wars, but returned to France after the war. African slaves were imported first to work coffee and then sugar plantations; after France abolished slavery in its colonies in 1848, indentured laborers from Indochina, India, and East Africa were imported. During the Second World War, the island switched from the side of Vichy France to the Free French forces after a ship of the Free French navy arrived on 11 November 1942, shortly after British forces had conquered Madagascar following warfare with its Vichy administrators. Réunion was a colony until 1946, when it became an overseas department of France (a department being the principal French subnational administrative unit). Sugarcane has long been the main export, but tourism has become an important industry. France subsidizes Réunion's government considerably.
Wars since 1500
Napoleonic Wars, 1810; Second World War, 1942 (United Kingdom against Vichy French government).
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 A law of 25 June 1928 officially restored the gold standard and repealed exchange controls.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. Exchanges between France and its African colonies were cut off from the time of the Allied invasion of French Morocco and Algeria in November 1942 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, French colonial francs 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.
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): See text for description of the troubles of early banks on the island.
Currency crashes: Since 1975, Réunion has used the French franc or the European euro, for which see country information on France (forthcoming in 2006).
No exchange rate data in Reinhart and Rogoff (2003).
References
Primary sources:
--Laws and decrees:
European Community. Gazette. 1968-2003. Journal officiel des Communautés européenne. Législation (English version from 1973 Official Journal of the European Communities. Legislation). Luxembourg: Office des Publications Officielles des Communautés (in English, Office for Official Publications of the European Communities).
European Union. Gazette. 2003-present. Official Journal of the European Union. Luxembourg : Office for Official Publications of the European Communities. Accessible through Eur-Lex portal to European law, <http://europa.eu.int/eur-lex/en/>, viewed 23 October 2005.
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.
Réunion. Gazettte. 1817-1947. Bulletin officiel de l'Île Bourbon (1817-1862); Journal officiel de l'Île le la Réunion (1862-1909); Journal et bulletin de l'Île de la Réunion (1910-1947). Saint-Denis de la Réunion. (Succeeded by French gazette.)
--Publications of monetary authorities:
Banque de France. Annual report. 1975-present. Compte rendu des opérations présenté à Monsieur le Président de la République au nom du Conseil Général du la Banque de France par ..., Gouverneur (1976-1992); Rapport adressé à Monsieur le Président de la République et au Parlement par ..., Gouveneur (1993-present). English version Annual Report Submitted to the President of the French Republic on Behalf of the General Council of the Banque de France by the Governor, ... (1991-1992); Annual Report to the President of the Republic and Parliament by the Governor (1993-present). Paris: Imprimerie Dawant (1975); Banque de France (1976-present). (The surtitle on the cover of the French version since 2004 says Rapport annuel de la Banque de France.)
Banque de France. Bulletin. 1971-present. Bulletin trimestriel (1971-1993); Bulletin de la Banque de France (1994-present). English version Banque de France Bulletin Digest (1994-present; contains articles from other publications also). Paris: Banque de France. (The publication Études was a successor to the Bulletin trimestriel for longer studies.)
Banque de France. Cahiers économiques et monétaires. 1972-present. Paris: Banque de France.
Banque de France. Études. 1994-present. Paris: Banque de France.
CCCE. Caisse Centrale de Coopération Économique. 1958-1959. Annual report. I could find no annual report listed for the organization until 1962. Later, the report was called Rapport d'activité: exercise .... Paris: Caisse Centrale de Coopération Économique.
CCFOM. Caisse Centrale de la France d'Outre-Mer. Annual report/annual report on French Equatorial Africa. 1944-1949. L'évolution monétaire des Territoires d'Outre-mer et le financement de leur plan d'équipement: (exercice 1947/1948 et exercice en cours) (1947/1948); Situation économique de l'A. E. F.: rapport annuel (1949). Paris: Caisse Centrale de la France d'Outre-Mer.
European Central Bank. Annual report. 1998-present. Annual Report. Frankfurt: European Central Bank. (Versions also exist in many other European languages.)
European Central Bank. Bulletin. 1999-present. Monthly Bulletin. Frankfurt: European Central Bank. (Versions also exist in many other European languages.)
IEDOM. Institut d'Émission des Départements d'Outre-Mer. Annual report. 1999-present. Rapport annuel. Paris: Institut d'Émission des Départements d'Outre-Mer.
IEDOM. Institut d'Émission des Départements d'Outre-Mer. Annual report (branch). 1999-present. Réunion en 1999 [etc.]. Paris: Institut d'Émission des Départements d'Outre-Mer.
IEDOM. Institut d'Émission des Départements d'Outre-Mer. Bulletin. 1999-present. Bulletin trimestriel de conjoncture. Paris: Institut d'Émission des Départements d'Outre-Mer.
IEDOM. Institut d'Émission des Départements d'Outre-Mer. Bulletin (branch). 1999-present. Bulletin trimestriel de conjoncture. Paris: Institut d'Émission des Départements d'Outre-Mer. (Broken into two parts: Bulletin trimestriel de conjoncture; suivi de la conjoncture économique and Bulletin trimestriel de conjoncture; suivi de la conjoncture financière et bancaire.)
IEOM. Institut d'Émission d'Outre-Mer. Annual report. 1959-1998. Rapport d'activité (1959-1991); Rapport annuel (1992-1998). Paris: Institut d'Émission d'Outre-Mer. (The annual report was divided into a general report and a separate report for each territory in which the organization operated.)
IEOM. Institut d'Émission d'Outre-Mer. Annual report (branch). 1973-1998. Rapport d'activité Réunion (1973-1991); Rapport annuel Réunion (1992-1998). Paris: Institut d'Émission d'Outre-Mer.
IEOM. Institut d'Émission d'Outre-Mer. Bulletin. 1975-present. Bulletin trimestriel de conjoncture. Paris: Institut d'Émission d'Outre-Mer.
IEOM. Institut d'Émission d'Outre-Mer. Bulletin (branch). 1975-present. Bulletin trimestriel de conjoncture, Mayotte. Paris: Institut d'Émission d'Outre-Mer.
--Web site of the current monetary authority (viewed 20 September 2005):
<http://www.iedom.fr>, <http://www.banque-france.fr>, and <http://www.ecb.int>
--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:
Caisse Française de Développement. 1991. Caisse centrale 1941-1991. Paris: Caisse Française de Développement. (Contains information on the Caisse Centrale de Coopération Économique. I have not seen this.)
Fuma, Sudel. 2001. Un exemple de l'impérialisme économique dans une colonie française au XIXe siècle: l'île de La Réunion et la société du Crédit Foncier Colonial. Paris: Éditions L'Harmattan.
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.) (The information concerncing Réunion is indirect.)
Leduc, Michel. 1965. Les institutions monétaires africaines: pays francophones. Paris: Éditions A. Pedone.
Mazard, Jean. 1953. Histoire monétaire et numismatique des colonies et de l'Union française, 1670-1952. Paris: Émile Bourgey.
Neurrisse, André. 1987. Le franc CFA. Paris: Librarie Générale de Droit et de Jurisprudence.
Ricaud, Nadine, and Jackie Ryckenbusch. 1983. Du troc à l'euro: 350 ans d'histoire monétaire à La Réunion. Catalog of an exhibition, Palais Rotaunay, Saint-Denis de la Réunion, 30 November-28 December 2001. Saint-Denis de la Réunion: Archives Départementales de la Réunion. (I have not seen this.)
Zay, E[rnest]. 1892. Histoire monétaire des colonies françaises d'après les documents officiels. Paris: Typographie de J. Montorier. (There also exists an undated reprint edition, perhaps from the 1960s, printed by Protat Frères in Macon.)
Monetary authorities: Réunion
Note: I am uncertain about the completeness of the account of the early years of the island's monetary history.
| Dates | Type | Name | Source | Remarks |
| 1719
-December 1766 |
private monopoly issue (as part of a currency union with Mauritius) | Compagnie Française des Indes (headquarters Paris, France) | France, charter of Compagnie Française des Indes, 1719; ordonnance of 26 May 1736, implied in Leduc (1965: 39); Mazard (1953: 40) | The Compagnie Française des Indes was a French company established to foster trade with the East Indies. It established an office in Saint-Paul. Its notes were called récépissés de la Compagnie des Indes (East India Company receipts, issued from 1719-1729), billets de boutique (store currency, issued in 1736), and billets de caisse (cash notes, issued in 1737, 1741, and 1761). The company issued the first coins in 1723 for Mauritius and Réunion jointly; the first coins for Réunion alone were issued in 1948. |
| December 1766
-31 December 1785 |
government issue (as part of a currency union ) | government of Îles de France et Bourbon (headquarters Port Louis, Île de France [now Mauritius]) | Îles de France et Bourbon, governor's ordonnances of December 1766, July 1768, cited in Mazard (1953: 41) | The French colonial government issued notes following the return of the island to French government by the Compagnie des Indes on 14 June 1764. The company's notes had depreciated to one-third of their face value. Government notes were issued in 1766, July 1768, September 1771-1772, and June 1778 (Mazard 1953: 41; Zay 1892: 254). |
| 1 January 1786
-31 December 1789 |
coins only | French silver colonial livre and Spanish silver dollar (piastre) | France, ordonnance of March 1781, cited in Mazard (1953: 41) | The government withdrew its notes from circulation by the end of 1785. |
| 1 January 1790
-later in 1790 |
government issue (as part of a currency union) | government of Réunion (headquarters Saint-Denis, Île Bourbon [now Réunion]) | France, edict of 10 June 1788, cited in Leduc (1965: 40) | Lack of notes was felt to be disadvantageous. The French government authorized a new issue of notes. |
| later in 1790
-1792? |
coins only | French silver colonial livre and Spanish silver dollar (piastre) | France, Règlement sur le papier, 28 July 1790, cited in [Lagesse 1988? See Mauritius] | The French edict of 10 June 1788 was suspended soon after it was implemented, because bureaucrats and soldiers did not want to be paid in depreciating paper money. |
| 1792?
-1796 |
government issue (as part of a currency union) | government of Réunion (headquarters Saint-Denis, Île Bourbon [renamed Réunion from 13 March 1793]) | France, ruling of 11 October 1790, cited in Leduc (1965: 40); Mazard (1953: 58) | Inflation like that of France at the time followed, with the currency depreciating by a factor of 10,000 by 1800. Notes were almost not used after October 1795. There was an unsuccessful attempt in 1796 to issue a new currency supposedly based on tax revenue, mandats gagés sur les impositions, but it was unsuccessful. |
| 1797
-31 December 1822 |
coins only (but see Remarks) | French silver colonial livre, Spanish silver dollar (piastre), and (after 1810) Indian silver rupee | Îles de France et Bourbon, governor's arrêté of 4 October 1806, cited in Leduc (1965: 41) | This is listed as a period of coins ony because the government notes issued in the previous period were so little used in practice. A new governor withdrew government notes at a rate of 2,000 local paper livres = Spanish silver $1 shortly after arriving in 1803. |
| 1 January 1823
-31 December 1823 |
government issue (see Remarks) | Banque de la Réunion (headquarters Saint-Denis, Réunion) | Réunion, governor's ordonnance of 10 November 1821, cited in Leduc (1965: 70) | A government-owned bank, created to supply a felt need for credit, opened in Saint-Denis. It was not intended to be a central bank in the modern sense, but it had the potential to act as such. It was the first bank on the island. |
| 1 January 1824
-28 February 1835 |
private monopoly issue | Société Anonyme de la Caisse d'Escompte / Caisse d'Escompte et de Prêts de l'Île Bourbon from 1826 (headquarters for both Saint-Denis, Réunion) | Réunion, governor's ordonnance of 23 December 1823, cited in Mazard (1953: 73); France, ordonnance of 14 May 1826, cited in Mazard (1953: 73); Réunion, governor's arrêté of 23 December 1831, cited in [perhaps Fuma] | This bank, which opened in Saint-Denis, was apparently moderately successful until its issuance of post-dated notes (bons de caisse) was eliminated on 1 March 1835. The bank entered into liquidation in 1835 (says Leduc 1965: 70; Mazard 1953: 73 says 1831.) [But compare with Fuma] I term this and two later episodes private monopoly issue because it is not clear whether a competing bank would have been allowed. |
| 1 March 1835
-1838 |
coins only | French franc (Banque de France [headquarters Paris, France]) | Leduc (1965: 70) | Without a local note issue, people used the French franc and, unofficially, various foreign coins. |
| 1838
-15 April 1849 |
private monopoly issue | Caisse d'Épargne et de Prévoyance (headquarters Saint-Denis, Réunion) | Leduc (1965: 70) | This bank opened in Saint-Denis. |
| 16 April 1849
-3 July 1853 |
private monopoly issue (another) | Comptoir d'Escompte et des Prêts (headquarters Saint-Denis, Réunion) | Mazard (1953: 73) | This institution, which opened in Saint-Denis, replaced the Caisse d'Épargne et de Prévoyance, apparently after economic difficulties related to the French revolution of 1848. |
| 4 July 1853
-1884 |
private monopoly issue (another) | Banque de la Réunion (headquarters Saint-Denis, Réunion) | France, law of 11 July 1851, reprinted in BCEAO (2000, v. 1: 181-4); Réunion, arrêté? of 16 July 1853 promulgating the law, cited in BCEAO (2000, v. 1: 180n.) [but compare with Fuma] | The Banque de la Réunion was the first truly substantial, durable bank established on the island. It was created with other French colonial banks of the period as a way of compensating slave owners after slavery was abolished in French colonies; slave owners received some original shares in the bank. The bank took over the business of the Comptoir d'Escompte et des Prêts. The second substantial, durable financial institution was the Crédit Colonial (later succeeded by Crédit Foncier Colonial [headquarters for both Paris, France]), which opened a branch in Saint-Denis in 1861. |
| 1884
-24 April 1899 |
government issue alongside private monopoly issue | government of Réunion (headquarters Saint-Denis, Réunion) Banque de la Réunion (headquarters Saint-Denis, Réunion) | Réunion, arrêté of 2 May 1879, cited in Mazard (1953: 74) | During an exchange rate crisis the local government issued bons de caisse in denominations of 1, 3, 30, and 100 local francs. |
| 25 April 1899
-26 June 1944 |
private monopoly issue | Banque de la Réunion (headquarters Saint-Denis, Réunion) | Mazard (1953: 74) | The government retired its notes from circulation. |
| 27 June 1944
-31 December 1974 |
joint monetary institute (as part of a currency union) | Caisse Centrale de la France d'Outre-Mer [CCFOM] (headquarters Algiers, Algeria / Paris, France from 20 June 1945) / Caisse Centrale de Coopération Économique [CCCE] (headquarters Paris, France) from 30 December 1958 / Institut d'Émission des Départements d'Outre-Mer [IEDOM] (headquarters Paris, France) from 1 October 1959 | CCFOM: Free French
government,
ordonnance of 27 June
1944 and France,
Ordonnance No. 45-1356, 20 June 1945;
CCCE: France,
Ordonnance 58-1374,
30 December 1958;
IEDOM: France, Ordonnance No. 59-74, 7 January 1959, and Decree No. 59-763, 20 June 1959 |
Upon the expiration of the Banque de la Réunion's charter, the new charter revoked its powers of note issue and gave them instead to the financial arm of the Free French government, the Caisse Centrale de la France d'Outre-Mer. |
| 1 January 1975
-31 December 1998 |
central bank (as part of a currency union) | Banque de France (headquarters Paris, France) | France, Law 74-1114, 27 December 1974; Decree No. 74-1130, 30 December 1974 | The nominal monetary authority continued to be the Institut d'Émission des Départements d'Outre-Mer (IEDOM [headquarters Paris, France]), which, however, withdrew its own notes and substituted those of the Bank of France. The French Treasury continued to have responsibility for issuing coins. Rance, Decree No 75-182, 19 March 1975, deprived old IEDOM notes of legal tender as of 31 March 1975. (See also IEDOM annual report 1975, Généralités: 43-4.) |
| 1 January 1999
-31 December 2001 |
joint central bank (as part of two currency unions, using two currency units having a fixed rate) | Banque de France (headquarters Paris, France) and European Central Bank (headquarters Frankfurt, Germany) | France, Law No. 98-357, 12 May 1998 | In this period the French franc existed as a submultiple of the European euro. The nominal monetary authority was the Institut d'Émission des Départements d'Outre-Mer (IEDOM [headquarters Paris, France]). |
| 1 January 2002
-present (2005) |
joint central bank (as part of a single currency union) | European Central Bank (headquarters Frankfurt, Germany) | European Union, Council, Regulation (EC) No. 974/98, 3 May 1998 | The European euro fully replaced the French franc in France and its possessions outside the Pacific at 1 European euro = 6.55957 French francs. The European Central Bank issues notes and coins. The nominal monetary authority is the Institut d'Émission des Départements d'Outre-Mer (IEDOM) (headquarters Paris, France). |
Exchange rate arrangements: Réunion
Note: I am uncertain about the completeness of the account of the early years of the island's monetary history.
| Dates | Official arrangement | Source | Unofficial arrangement, if different | Remarks |
| 1665
-1719 |
fixed (as part of a currency union with Mauritius); 1.5 French colonial livres = 1 French livre (livre tournois) | Mazard 91953: 39-40) | The first permanent settlement began in 1654. In the early years of the colony, the Spanish silver dollar (piastre), worth about 10 French livres, was the most widely used coin. Certain foreign coins were accepted as legal tender. The exchange rate of 1.5 French colonial livres = 1 French livre began for Quebec in 1662, but it may not yet have applied to Réunion at the start of this period. | |
| 1719
-1815 |
pegged (as part of a currency union with Mauritius to 6 December 1810); 1.5 French colonial livres = 1 French livre | (Mazard 1953: 40-1) | In practice, often a clean? float. During the British occupation, 1810-1814, the most widely used coin was the Indian silver sicca rupee. | Notes often circulated at a discount to gold and silver coins. By 1800 the local paper livre had depreciated to 10,000 local paper livres = Spanish silver $1. Apparently the status quo continued under British occupation, 1810-1814. During British occupation the Indian rupee was apparently also legal tender (Mazard 1953: 73). |
| 1815
-1839 |
pegged; 1.5 French colonial livres = 1 French livre and Spanish silver $1 (piastre) = 2 Indian silver sicca rupees | (Mazard 1953: 73) | French administration resumed in 1815. The Indian silver sicca rupee continued the be the main coin in use. In principle, Spanish silver $1 = 10 French colonial livres. | |
| 1839
-November 1942 |
pegged; 1 local franc = 1 French franc | France, law of 2 February 1820; Réunion, decree of 16 July 1839, cited in Mazard (1953: 73) | The Indian silver rupee continued to circulate until 1879 because its value was set by law at 2.50 Indian silver rupees = 1 local franc, which was an overvaluation (Mazard 1953: 73). Réunion, decree of 2 April 1879 demonetized all foreign coins as of 6 May 1879 (Mazard 1953: 73). In 1884 an exchange rate crisis made the local franc depreciate by 17% against the French franc (Mazard 1953: 74). | The French franc replaced the colonial livre in the French colonies, long after France itself (where the change had occurred in 1803). In Réunion the delay was so long becuse of the wide use of foreign coins. Legally, local francs in what was to become the CFA franc zone were not separate from the French franc until 26 December 1945. The French franc was a decimal currency. |
| November 1942
-2 February 1943 |
pegged; 176.625 local francs = UKŁ1 and 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 French franc with the pound sterling and the US dollar. Réunion came under Free French control on 11 November 1942 after an Allied military campaign in neighboring Madagascar. | |
| 3 February 1943
-5 December 1944 |
pegged; 200 local francs = UKŁ1, or 50 local francs = US$1 | Anglo-Free French agreement of 2 February 1943, cited in Mazard (1953: 106) | In many of the areas under its control, the Free French government devalued local francs from pre-Second World War rates based on 176.625 French francs = UKŁ1, or 43.80 French francs = US$1. | |
| 6 December 1944
-25 December 1945 |
pegged; 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 (200 local francs = UKŁ1, or 50 local francs = US$1). Doing so in effect restored the French franc as the anchor currency. | |
| 26 December 1945
-16 October 1948 |
pegged; 1 (Réunion) 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 the 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. | |
| 17 October 1948
-31 December 1959 |
pegged; 1 (Réunion) 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. 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. | |
| 1 January 1960
-31 December 1962 |
pegged; 50 (Réunion) 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. France, Law No. 59-1511, 30 December 1959, postponed the introduction of the new franc in French Guiana, Guadeloupe, Martinique, and Réunion until a date to be named later. | |
| 1 January 1963
-20 August 1971 |
pegged; 1 new Réunion (CFA) franc = 1 French franc | France, Decree No. 62-1093, 14 September 1962 | Adopted a new unit of account equal to the French franc; 1 new Réunion franc = 50 old Réunion francs. However, notes continued to have amounts in both old and new francs printed on them through the end of 1974. | |
| 21 August 1971
-20 March 1974 |
pegged, dual rate; official rate 1 Réunion (CFA) franc = 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. | Réunion established a dual exchange rate when France did likewise on 21 August 1971. Notes continued to have amounts in both old and new francs printed on them through the end of 1974. |
| 21 March 1974
-31 December 1974 |
pegged; 1 Réunion franc = 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 | Eliminated the dual exchange rate the same day as France. Notes continued to have amounts in both old and new francs printed on them. | |
| 1 January 1975
31 December 1998 |
fixed (as part of a currency union); used French franc | France, Law 74-1114, 27 December 1974; Decree No. 74-1130, 30 December 1974 | See the table for the France on parallel market data for the French franc. | Réunion ceased issuing a separate currency. |
| 1 January 1999
-31 December 2001 |
fixed (as part of a currency union); used French franc (itself fixed to European euro) and European euro; European euro had an independent float | France, Law 98-357, 12 May 1998; European Union, Council, Regulation (EC) No. 2866/98, 31 December 1998 | In this period the French franc existed as a submultiple of the European euro, at 1 European euro = 6.55957 French francs. No euro notes and coins existed until the next period. | |
| 1 January 2002
-present (2005) |
fixed (as part of a currency union); uses European euro, which has an independent float | European Union, Council, Regulation (EC) No. 2866/98, 31 December 1998 | The European euro fully replaced French franc in France and its possessions outside the Pacific on 1 January 2002 at 1 European euro = 6.55957 French francs. |