The franc (French: franc malgache, ISO 4217 code MGF) was the currency of Madagascar until January 1, 2005. It was subdivided into 100 centimes.
The first francs to circulate in Madagascar were French francs. These were supplemented during the First World War by emergency issues, including issues of postage stamps fixed to pieces of card in denominations of 0.05 up to 2 francs.
The Malagasy franc was introduced on July 1, 1925, by the French government for use in the colony. The currency was issued by the government-owned Banque de Madagascar and was pegged at par to the French franc. Only banknotes were issued with French coins continuing to circulate. When the Comoro Islands became a separate French territory, the name of the issuing bank was changed to Banque de Madagascar et des Comores. The Madagascar-Comores CFA franc (XMCF) replaced the Malagasy franc on December 26, 1945, with the creation of the other CFA francs. The CFA franc was worth 1.7 French francs until 1948 when a devaluation of the French currency increased the rate to 1 CFA franc = 2 French francs. When the new French franc was introduced in 1960, the rate became 1 CFA franc = 0.02 French francs.
After independence from France, the privilege to issue bank notes was transferred to the Institut d'Émission Malgache on December 31, 1961. The CFA franc was replaced by the Malagasy franc on July 1, 1963. It was pegged to the French franc with the same value as the CFA franc (1 FRF = 50 MGF), guaranteed by the French treasury. Denominations were given both in francs and ariary, with 5 francs = 1 ariary. Madagascar left the CFA franc zone in 1972 and the Malagasy franc was declared inconvertible. Banknotes were issued by the Institut d'Émission Malgache until 1974 when the Banque Centrale de Madagascar (Central Bank of Madagascar) took over that function.
The peg to the French franc was kept until 1982, when a series of devaluations began. Finally, the franc was floated freely in May 1994. On June 1, 1995, the exchange rate had dropped to 1 FRF = 777 MGF. On January 1, 2005, it was replaced by the ariary at a rate of 5 francs to the ariary. By then, the exchange rate was 1 FRF = 1758 MGF (with the FRF value converted from the Euro).
The first Malagasy coins were issued in 1943 by the Free French. These were bronze 50 centime and 1 franc coins bearing the Cross of Lorraine symbol. In 1948, aluminum 1 and 2 franc coins were introduced, followed by aluminum 5 francs and aluminum bronze 10 and 20 francs in 1953.
From 1965, coins were issued denominated in both francs and ariary.
Following emergency issues between 1914 and 1917 related to the availability of 5, 10 and 20 franc notes, distinct Malagasy notes were introduced in 1925 in denominations of 5, 10, 20, 50, 100 and 1000 francs. The lower three denominations were replaced by coins in the 1940s and 50s, with 5000 franc notes introduced in 1950.
From 1961, banknotes were issued denominated in both francs and ariary.
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