The Franc Zone: Can the operations account mechanism survive the push for financial deepening?

This chapter presents the growing literature on financialization in developing countries, and specifically low income countries, by exploring the particularities of financial sector development in the Franc Zone. The Franc Zone consists of a common currency area between two sub-regions in Sub Saharan Africa and France. The main drivers that contributed to financial sector transformation in the Franc Zone were the conditionality programmes implemented by the International Financial Institutions and the institutional re-organization following the devaluation in 1994. The chapter provides several key historical and institutional factors that have shaped the development of the financial sector in the Franc Zone. It argues that the internal mechanism of the Franc Zone, the Operations Account, may prove too strict to accommodate the generalized credit boom which is currently under way. The chapter discusses historical and institutional changes that have been instrumental in shaping and restructuring the Franc Zone's financial sector