France's government on Wednesday approved draft legislation that will transform West Africa's CFA franc into the "Eco", a revamped currency with no lasting links to the region's former colonial ruler.

The bill, which must still be approved by parliament, was okayed by the cabinet, spokeswoman Sibeth Ndiaye said.

The overhaul will see the currency, used by more than a dozen countries, maintain its fixed exchange rate of 655.96 to the euro, and an end to the Bank of France holding half the currency's reserves.

The currency is used by Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. All but Guinea-Bissau are former French colonies.

Seven other members of the Economic Community of West African States (ECOWAS) have their own currencies, none of them freely convertible, and a push is under way to get all to join the new Eco.

Under an agreement with France, the reform entails the "withdrawal of French governance" from any aspect related to the new currency, Ivory Coast President Alassane Ouattara said in December.

The CFA franc, created in 1945, was seen by many as a sign of French interference in its former African colonies even after the countries became independent.

It was initially pegged to the French franc, but has been linked to the euro since the EU currency was introduced two decades ago.