Monetary Union in West Africa (ECOWAS)

Occasional Papers, February 14, 2001

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The chapter evaluates whether a monetary union makes economic sense for ECOWAS members.
It reviews the economic situation of the ECOWAS members with the objective of evaluating the ease with which they can proceed to a common currency.
Regional integration resulting in greater trade among ECOWAS countries may help increase efficiency of production.
Trade among developing countries, in general, is likely to have fewer efficiency benefits than trade with developed countries because the possibilities of exploiting complementarities are less.

The chapter discusses the institutional requirements for a successful Monetary Union in West Africa (ECOWAS).
Emphasis is placed on institutional arrangements that would support exchange rate stability and macroeconomic coordination across members.

The chapter considers how best the political momentum for a union can be channeled toward a fundamental improvement in underlying policies.
The foregoing considerations suggest that the momentum in favor of monetary union should be channelled into the crucial first phase of enhanced mutual surveillance.

Enhanced mutual surveillance among ECOWAS members.
Emphasis on each country improving its macroeconomic and structural policies.
Success in improved policies and surveillance would help to increase exchange rate stability.

Subjects: Currencies, Economic integration, Exchange rates, Foreign exchange, International trade, Monetary unions, Money, Real effective exchange rates, Terms of trade
Keywords: Currencies, currency, ECOWAS convergence criteria, ECOWAS country, ECOWAS monetary union, ECOWAS monetary union project, Exchange rates, Global, Monetary unions, North America, OP, Real effective exchange rates, Sub-Saharan Africa, Terms of trade, WAEMU, WAEMU country, West Africa