Table of Contents
The Eurozone has attracted much criticism following the sovereign debt crisis and near collapse of some of its members. Despite these conditions, the concept of monetary union has not entirely been discredited: plans are afoot in West Africa to expand the existing currency union to include new members, which could see a new currency encompass a region of over 300 million people.
Features and benefits
* Helps to explain what a monetary union is and the impact it can have.
* Analysis of the CFA Franc region in Western Africa, assessing both its improvements and failings.
* Evaluates the suitability of the Economic Community of West African States as a currency zone, and how the Eco project is developing.
* Assesses the Eurozone as the world's largest monetary union, and whether any lessons can be applied to West Africa should they proceed.
Currency Unions are where two or more member states share a common currency. In order to ascertain where such unions would be effective, theory suggests the "optimal currency area". Robert Mundell suggests there are four key criteria to optimal currency unions when adopting the regime.
The West African Economic and Monetary Union (WAEMU) have considered its currency, the CFA Franc, a qualified success so far. Another region within the Economic Community of West African States, the West African Monetary Zone (WAMZ), has proposed the Eco currency, and depending on its success, this could be extended across the entire ECOWAS region.
The Eco's promise is primarily down to the success of the WAEMU's Franc. It has provided a template for development among the member countries. Intra-zonal trade is some of the highest in Africa according to the IMF, a key component in promoting development.
Your key questions answered
* What is a currency union, and how can it be judged successful?
* What is the Eco?
* What can the Eco learn from the CFA Franc?
* What problems face the Eco's Introduction?
* Are there any lessons from the Eurozone for new monetary unions?
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