How Feasible Is The West African Eco Currency Union A New Approach
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| Author | : William Miles |
| Publisher | : |
| Total Pages | : 34 |
| Release | : 2015 |
| Genre | : |
| ISBN | : |
A recent proposal to expand the CFA Franc zone in West Africa would create a currency union that, in terms of population, would rival the Euro. This new currency union would include Nigeria, which would have the largest GDP, and which is also, unlike most other current and proposed members, heavily dependent on oil exports. Synchronization of business cycles across the nations of this new monetary union would be important in assuring its feasibility. In this paper, we apply a recently developed set of tools and find, first, that by some salient measures, the proposed nations in this union exhibit less business cycle coherence than those of the euro zone prior to its launch. Secondly, Nigeria seems especially ill-suited for this new currency. Finally, it does not appear, based on the experience of several nations, that the act of joining the currency union increases business cycle synchronization, contrary to the “Endogenous Optimal Currency Area” hypothesis.
| Author | : Moritz Becker |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2023 |
| Genre | : |
| ISBN | : |
In recent years, there has been a notable increase in the efforts to establish a monetary union within the Economic Community of West African States (ECOWAS). Initially scheduled for implementing a common currency in 2003, ECOWAS had agreed to introduce a common currency called the Eco by 2020. However, due to the COVID-19 pandemic, the implementation of the Eco currency was postponed until 2027. This study adds to the existing research on the feasibility of the Eco as a common currency for ECOWAS. It adopts the framework proposed by Bayoumi and Eichengreen (1997) to operationalize the Optimal Currency Area (OCA) theory. Using OLS estimation, the study models the relationship between OCA conditions and the bilateral nominal exchange rate volatility (BNER) among West African countries from 2000 to 2021. The study's findings indicate that the Eco could be considered feasible for the countries within the West African Economic and Monetary Union (WAEMU) and Cape Verde, The Gambia, Guinea, and Sierra Leone. However, Ghana and especially Nigeria do not meet the OCA conditions to the same extent as the other countries. Consequently, an immediate monetary union encompassing all ECOWAS member countries may not be feasible. Nevertheless, the study's policy implications strongly advocate for a gradual integration approach, similar to the Economic and Monetary Union of the European Union (EMU).
| Author | : Emmanuel Tweneboah Senzu |
| Publisher | : Eliva Press |
| Total Pages | : 46 |
| Release | : 2021-07-20 |
| Genre | : |
| ISBN | : 9781636482736 |
The Book recognizes and acknowledges the current failure of the ECOWAS vision 2020 to institute its Eco-currency union, and proceed to explore and develop an argument based on the existing studies of structured economic shocks, significant to the failure of the single currency union, and its major causal factors. And with observed structured analysis, proposed catalytic activator, as a method and a theoretical guide to attain the single currency union within three (3) years ahead, if the necessary requirement as the commitment level of members' State is applied towards the single currency unification program. It then elaborates in the spirit of precision the process required to sustain the Eco-currency program in other to elevate member States from its domestic currencies, struggling as a subservient economic bloc to the adoption of a new anticipated domineering currency in its own merit to shoulder with the global dominating hard currencies.
| Author | : |
| Publisher | : |
| Total Pages | : 25 |
| Release | : 2019 |
| Genre | : Electronic books |
| ISBN | : |
Since the inception of the Economic Community of West African States (ECOWAS) in 1975, the founding members have aimed to introduce a single regional currency as a mechanism to achieve continued economic integration, sustainable economic expansion and poverty reduction. This paper empirically assesses the feasibility of the proposed West African Monetary Zone (WAMZ) as an optimum currency area by considering potential benefits and costs of the union using the Gravity Model of Trade and Vector Autoregression (VAR) analysis respectively. To perform the assessment, I first employ the Gravity Model of Trade to analyze the trade-creating benefits of adopting a common currency by evaluating the effect of currency risk on bilateral trade flows. I find that currency risk is not a significant trade barrier. Then, I perform a VAR analysis to understand the symmetry of shock responses across the proposed union and discover that both supply and demand shocks are generally asymmetric. This finding indicates that the retention of monetary policy autonomy by member countries will be more beneficial than joining the proposed currency union. The results of both analyses indicate that the proposed monetary zone is not an optimal currency area. Finally, I employ a K-means clustering algorithm to derive a statistically driven cluster of countries best suited to form an optimal currency area in West Africa and find three optimal clusters.
| Author | : Eswar Prasad |
| Publisher | : |
| Total Pages | : 180 |
| Release | : 2021-07-13 |
| Genre | : |
| ISBN | : 9780815738534 |
Assessing the potential benefits and risks of a currency union Leaders of the fifteen-member Economic Community of West African States (ECOWAS) have set a goal of achieving a monetary and currency union by late 2020. Although some progress has been made toward achieving this ambitious goal, major challenges remain if the region is to realize the necessary macroeconomic convergence and establish the required institutional framework in a relatively short period of time. The proposed union offers many potential benefits, especially for countries with historically high inflation rates and weak central banks. But, as implementation of the euro over the past two decades has shown, folding multiple currencies, representing disparate economies, into a common union comes with significant costs, along with operational challenges and transitional risks. All these potential negatives must be considered carefully by ECOWAS leaders seeking to meet a self-imposed deadline. This book, by two leading experts on economics and Africa, makes a significant analytical contribution to the debates now under way about how ECOWAS could achieve and manage its currency union, and the ramifications for the African continent.
| Author | : Oyinlola Morounfoluwa Esan |
| Publisher | : |
| Total Pages | : 43 |
| Release | : 2009 |
| Genre | : Banks and banking |
| ISBN | : |
ABSTRACT : Eco has been proposed as a common currency for the West African Monetary Zone to enable a better trade for member countries. A group of five out of the fifteen Western African countries are to begin to use the Eco in 2009 which was decided by the West African Monetary Institute based in Accra, Ghana. This is intended to be the forerunner of a common central bank. Gravity-model as a method has been employed to estimate the impact of Eco on trade using historical statistics of member countries. Factors said to affect trade such as GDP, language, distance and more are also used independently to determine the effect they have on trade. The study also analysed how these factors affect trade among member countries. In this study a large panel data set has been used to estimate the time series effect of currency union on trade. Data set includes annual bilateral trade between 5 countries from 1970 through 2007. In all the three models tested, the study finds that there is clear positive relation between currency union and trade and it is statistically significant. Controlling for a host of other factors, findings show that the effect of a common currency on bilateral trade between member countries varies from 100 per cent to 200 per cent. This study has proved that a common currency initiative can contribute in great deal to the economic development of the member countries in the region.
| Author | : Eswar Prasad |
| Publisher | : Brookings Institution Press |
| Total Pages | : 203 |
| Release | : 2021-07-13 |
| Genre | : Business & Economics |
| ISBN | : 0815738544 |
" Assessing the potential benefits and risks of a currency union Leaders of the fifteen-member Economic Community of West African States (ECOWAS) have set a goal of achieving a monetary and currency union by late 2020. Although some progress has been made toward achieving this ambitious goal, major challenges remain if the region is to realize the necessary macroeconomic convergence and establish the required institutional framework in a relatively short period of time. The proposed union offers many potential benefits, especially for countries with historically high inflation rates and weak central banks. But, as implementation of the euro over the past two decades has shown, folding multiple currencies, representing disparate economies, into a common union comes with significant costs, along with operational challenges and transitional risks. All these potential negatives must be considered carefully by ECOWAS leaders seeking tomeet a self-imposed deadline. This book, by two leading experts on economics and Africa, makes a significant analytical contribution to the debates now under way about how ECOWAS could achieve and manage its currency union, andthe ramifications for the African continent. "
| Author | : Diery Seck |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 274 |
| Release | : 2013-11-18 |
| Genre | : Business & Economics |
| ISBN | : 3319012827 |
This book presents a number of key studies pertaining to the most pressing challenges of economic regional integration in West Africa. The issues of monetary coordination, foreign exchange volatility, taxation, savings and macroeconomic convergence are investigated from a regional perspective. The characteristics of West Africa’s trade policy are reviewed and assessed in comparison to that of the Southern African Development Community (SADC). The extent to which regional integration can tackle the challenge of unemployment is the focus of studies on labour markets. Development of the private sector and coordination of regional cross-border transportation are examined through the lens of economic collaboration between Arab and African countries. The book provides fresh new answers to persistent development questions and sheds new light on long-held views that are either incomplete or no longer true. It also opens new perspectives on the search for sustainable avenues for Africa’s development. In this regard, it may contribute to the emergence of a new paradigm on Africa’s development process and its science-based, policy-oriented implementation.
| Author | : |
| Publisher | : UN |
| Total Pages | : 166 |
| Release | : 2012 |
| Genre | : Business & Economics |
| ISBN | : |
The fifth of the series (ARIA/V) has come at a time of renewed enthusiasm for shortening the period of the vision of the Abuja Treaty. Its overall objective is to provide an analytical research publication that defines frameworks for African Governments, the African Union and the Regional Economic Communities, towards accelerating the establishment of the African Common Market through: the speedy removal of all tariff and non-tariff barriers, obstacles to free movement of people, investments and factors of production in general across Africa, and through fast-tracking the creation of an African continental Free Trade Area
| Author | : Michael Emerson |
| Publisher | : |
| Total Pages | : 356 |
| Release | : 1992 |
| Genre | : Business & Economics |
| ISBN | : 9780198773245 |
The European Community is negotiating a new treaty to establish the constitutional foundations of an economic and monetary union in the course of the 1990s. This study provides the only comprehensive guide to the economic implications of economic and monetary union. The work of an economist inside the Commission of the European Community, it reflects the considerations influencing the design of the union. The study creates a unique bridge between the insights of modern economic analysis and the work of the policy makers preparing for economic and monetary union.
