In 1959, the Central Bank of the West African States (Banque Centrale des États de l'Afrique de l'Ouest-BCEAO) succeeded the Currency Board of French West Africa and Togo as the bank of issue for the former French West African territories. In 1962, it was reorganized as the joint note-issue bank, and in 2000 included Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. BCEAO notes, known as CFA francs, are unreservedly guaranteed by France. Foreign exchange receipts of the member states go into the franc area's exchange pool, which in turn covers their foreign exchange requirements.
In December 1974, the government nationalized the banking sector, amalgamating the three main commercial banks into the Commercial Bank of Benin. There is also the Benin Development Bank. Other commercial banks include the Bank of Africa Benin, Banque Internationale du Benin, Ecobank-Benin, the Financial Bank, Equibail-Benin, Credit du Benin, Continental Bank Benin, and Credit Promotional Benin.
The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $548.1 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $734.7 million. The money market rate, the rate at which financial institutions lend to one another in the short term, was 4.95%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 6.5%.
There is no securities market in Benin.