The Kingdom of Dahomey existed from the 17th century until 1904 in present-day Benin, West Africa. The Fon people established it on the Abomey Plateau and it became a regional power in the 18th century by conquering the Kingdom of Whydah on the Atlantic coast. During the 19th century, it gained importance as an organized state with an economy based on conquest and slave labor, significant trade and diplomacy with Europeans, a centralized administration, taxation systems, and an organized military. The Dahomey Amazons, an all-female military unit, and the Vodun religious practices were notable features of the kingdom. 

In 1894, Dahomey became part of French West Africa in 1899, and became an autonomous republic, gaining full independence on August 1, 1960. In 1975, the nation was renamed the People's Republic of Benin. Later, it became the Republic of Benin in 1990.

Dahomey's economy relied heavily on both domestic slavery and the transatlantic slave trade. The kingdom captured men, women, and children through wars and raids, and sold them to European slave traders in exchange for goods such as firearms, textiles, and alcohol. Dahomey used magical rituals to aid in slave trading, including forcing slaves to circle the "Tree of Forgetfulness" to erase memories of their culture and families before being sold. This was believed to prevent the spirits of deceased slaves from seeking revenge against the kingdom's rulers.

The French Franc was used in Dahomey dates from 1855, alongside Maria Theresa Thalers as well as cowrie shells. In 1945, the French franc notes from the Franc des Colonies Francaises d'Afrique were replaced by Banque de France banknotes in 1945. Since 1958, banknotes from the Banque Centrale des Etats de l'Afrique de l'Ouest have been in circulation. 

The West African Economic Monetary Union was established in 1994 to provide a new framework for fostering the member countries' growth and development objectives. The Union has a common central bank, the Central Bank of West African States, with headquarters in Dakar and national branches in the member states.