The franc is the official currency of the Union of the Comoros. Comoros is a three-island nation located off the southeastern coast of Africa between Mozambique and Madagascar. The franc is a decimal currency subdivided into 100 centimes, even though no centime-denominated currency has ever been issued in Comoros. The Comorian franc was introduced in 1981 pegged to the French franc at a rate of 50 Comorian francs: 1 French franc. The Comorian franc is issued by the Banque Centrale des Comores with coins minted and banknotes printed in France.
Comoros became a protectorate of France in 1886, and the country began using the French franc as its currency at that time. However, in 1912 Comoros officially became a province of Madagascar, another French colony, and in 1925, the Bank of Madagascar was formed and began issuing Malagasy franc, which was pegged to the French franc. When Comoros was separated from Madagascar in 1945, the Malagasy franc was replaced by the Madagascar-Comoros CFA franc.
After several years of political strife during the 1970s, Comoros was made a part of the franc zone, and the Comorian franc was introduced on a pegged, free convertibility system with the French franc. The Comorian franc is guaranteed through an account with the French Treasury held by the Central Bank of Comoros. Most of the foreign reserves of Comoros are held as euro in this account. In 1994, the peg to the French franc was removed, and the currency floated until 1999 when it was pegged to the newly introduced euro. The Council of the European Union ruled that the existing monetary agreement with France may remain in place, but the European Central Bank will have no obligation to the Central Bank of Comoros, and any changes to the agreement must be approved by the European Commission.
Comoros is known for being among the poorest countries of the world. This has made economic growth the top priority of the government, but unemployment still averages at about 14 percent. Comoros is primarily a rural agricultural nation, but population density remains high even in agricultural centres outside of major cities. Although total GDP grows from one to two percent annually, per capita GDP has been in a steady decline since 2004. The population continues to increase as education and natural resources decrease. Transportation is inadequate by modern standards, so the primarily young population is greatly restricted.