West Africa’s Centralized Currency and What You Need to Know

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2020 marks beginning of what seems to be West Africa’s proposed single central currency the “ECO”. This comes as part of the plans of leaders of the Economic Community of West African States (ECOWAS) to make Africa a more integrated continent and is intended to come into fruition by the middle of the year.

What you need to know?

  • To be launched by July 2020.
  • Will be used by 15 ECOWAS members.
  • The exchange rate is said to be flexible.
  • The monetary union will have a specific inflation rate as one of its central goal.
  • It is going to improve trade in the western region.
  • The Central Bank can now act Independently

ECOWAS will be working with the West African Economic and Monetary Union (UEMOA), the West Africa Monetary Institute (WAMI) and the Central Bank of West African States’ (BCEAO) to carry out the implementation of the new road map for a proposed single trade currency with reserves at the Central Bank in a suitable level to speed up the process.

The Central Banks [BCEAO] reserves will be transferred to at least one European central bank in the form of securities. The bulk of the UEMOA’s monetary reserves is in Euros. Some reserves may also be transferred to the Switzerland-based Bank for International Settlements (BIS).

Eight of the Fifteen ECOWAS countries (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo) currently jointly use the CFA franc, the eight member states and France will sign an agreement to do away with the operations account agreement with the French Treasury and replace it with a guarantee agreement.

“The single currency if properly implemented will improve trade by allowing specific countries to specialize at what they are good at, and exchange it for other goods that other countries in the bloc produce more efficiently,” analyst Tokounbo Afikuyomi told CNN

The currency is essentially supposed to boost economic development in the West African region and improve cross border trade. If implemented, countries across the region will be able to move and spend money across different countries without worrying about exchange rate costs.

The new currency will be adopted progressively by different African states as and when they fulfil the convergence criteria, i.e., economic stability, growth, budget deficit, inflation, current account deficit, government debt, etc.

Daniel Ayuba

mental creative

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