The Central Bank of West African States (BCEAO) is an international public institution with headquarters in Dakar, Senegal. It is the common issuing institution of the member states of the West African Monetary Union (WAMU). At the time of its founding, on May 12, 1962, its membership comprised the Republics of Côte d’Ivoire, Dahomey, Mali, Niger, Mauritania, Senegal, Togo and Upper Volta. Currently, there are eight (08) member states in the Monetary Union: Benin, Burkina, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.
In addition to centralizing the cash reserves of the Union, the main missions of the Bank are:
- to issue currency,
- to manage monetary policy,
- to organize and monitor banking activities and to provide assistance for the WAMU member states.
The BCEAO has the exclusive right to issue currency throughout the member states of the West African Monetary Union. It issues banknotes and coins that are legal tender and redeemable throughout the member states of the Union. The creation, issuance and cancellation of banknotes and coins are decided by the Council of Ministers. The single currency promotes crossborder movements of banknotes between the states. The Central Bank also conducts ongoing research on printing processes relating to currency authentication, with a view to enhancing the security of the banknotes it issues.
The Central Bank’s management of the monetary policy of the member states of the Union consists of adjusting the overall liquidity of the economy according to trends in the economic situation, in order to ensure price stability and promote economic growth.
The Central Bank defines the regulations applicable to banks and financial institutions and ensures their supervision. In this framework, the WAMU Banking Commission, founded on April 24, 1990, and chaired by the Governor of the BCEAO, ensures the organization and monitoring of the banking system within WAMU. The BCEAO is responsible for the General Secretariat of the Banking Commission.
Upon request by the Governments of the WAMU member states, the Central Bank assists them in their relations with international financial and monetary institutions and in any negotiations they may undertake with a view to concluding international financial agreements. It may be placed in charge of the implementation of such agreements under terms set by the conventions approved by the Board of Directors.
Specifically regarding the relations of the states with the International Monetary Fund, the Central Bank acts as a financial agent, in keeping with the provisions of the Convention of September 24, 1981, signed by the BCEAO and the member states.
The issuing institution also assists the states in the areas of design and monitoring of adjustment programme implementation and debt management. (Source: www.bceao.int).
The fundamental missions of the Central Bank are as follows:
- to define and implement monetary policy within WAMU,
- to ensure the stability of the banking and financial system of WAMU,
- to promote the proper functioning and ensure the monitoring and security of payment systems in WAMU,
- to implement WAMU’s exchange rate policy according to the terms established by the Council of Ministers,
- and to manage the official foreign exchange reserves of the WAMU member states.
In keeping with monetary equilibrium, the Central Bank may carry out specific missions or projects designed to contribute to an improved monetary policy environment and greater diversification as well as a stronger financial system in WAMU and enhanced technical and professional capacities in the banking and financial sector. (Source: www.bceao.int).