The Central Bank of West African States (BCEAO) is an international public institution headquartered in Dakar, Senegal. It serves as the common issuing institution for the Member States of the West African Monetary Union (WAMU). When it was established on 12 May 1962, it brought together the Republics of Côte d’Ivoire, Dahomey, Upper Volta, Mali, Niger, Mauritania, Senegal and the Togolese Republic. Today, the Union has eight (8) Member States: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.
In addition to centralising the Union’s foreign exchange reserves, its core responsibilities are:
- currency issuance;
- management of monetary policy;
- organisation and supervision of banking activity, as well as support for the Union’s Member States.
The BCEAO enjoys the exclusive privilege of currency issuance across all Member States of the West African Monetary Union. It issues legal tender in the form of banknotes and coins, which have legal tender status and full discharge power throughout all Union Member States. The creation, issuance and withdrawal of currency are decided by the Council of Ministers. The movement of banknotes between States is facilitated by the uniformity of the currency. In relation to printing, the Central Bank conducts ongoing research into currency authentication in order to strengthen the security of the banknotes it issues.
The Central Bank is entrusted with the following fundamental missions:
- defining and implementing monetary policy within WAMU;
- safeguarding the stability of the WAMU banking and financial system;
- promoting the smooth functioning of payment systems and ensuring their supervision and security within WAMU;
- implementing WAMU’s exchange rate policy under the conditions set by the Council of Ministers;
- managing the official foreign exchange reserves of WAMU Member States.
The Central Bank may also undertake, while preserving monetary stability, specific assignments or projects that contribute to improving the monetary policy environment, diversifying and strengthening the WAMU financial system, and enhancing technical and professional capacity in the banking and financial sector.
The management of monetary policy for the Union’s Member States by the Central Bank consists of adjusting overall liquidity in the economy in line with economic conditions, in order to ensure price stability on the one hand and promote economic growth on the other.
The Central Bank defines the regulatory framework applicable to banks and financial institutions and exercises supervisory functions over them. In this regard, the WAMU Banking Commission, established on 24 April 1990 and chaired by the Governor of the BCEAO, is responsible for overseeing the organisation and control of the banking system within WAMU. The BCEAO serves as the General Secretariat of the Banking Commission.
At the request of Member State governments, the Central Bank assists them in their relations with international financial and monetary institutions and in the negotiations they undertake with a view to concluding international financial agreements. It may also be entrusted with implementing such agreements under the conditions laid down in conventions approved by the Board of Directors.
With specific regard to relations between States and the International Monetary Fund (IMF), the Central Bank acts as financial agent pursuant to the provisions of the Convention of 24 September 1981, signed between the Bank and the Member States.
The issuing institution also assists States in defining and monitoring the implementation of adjustment programmes, as well as in debt management.
