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West African Currency Unions: Rationale and Sustainability


  • Xavier Debrun
  • Paul Masson
  • Catherine Pattillo


Drawing on the recent literature and experience of monetary integration in Europe, the paper examines the rationale for establishing regional currency unions in western Africa. Despite dramatic economic, political and historical differences between the two regions, the analysis indicates that monetary unification might well be beneficial for a number of the member states of the Economic Community of West African States (ECOWAS). The main reason is that the costs stemming from the loss of monetary autonomy are often more than offset by the gains originating in the (partial) separation of monetary and fiscal powers. However, large countries with relatively ambitious public expenditure objectives would not be attractive partners because they would be expected to pressure the common central bank, creating excessive inflation in the entire union. Hence, the desirability and sustainability of a currency union critically depends on fiscal discipline among its members. We also explore the vulnerability of regional monetary institutions to country-specific disturbances. Overall, the desirability of an ECOWAS monetary union requires a strong fiscal surveillance procedure both in the transition phase and after the establishment of the union. (JEL E58, E61, F42)

Suggested Citation

  • Xavier Debrun & Paul Masson & Catherine Pattillo, 2003. "West African Currency Unions: Rationale and Sustainability," CESifo Economic Studies, CESifo, vol. 49(3), pages 381-413.
  • Handle: RePEc:oup:cesifo:v:49:y:2003:i:3:p:381-413.

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    Cited by:

    1. Balogun, Emmanuel Dele, 2007. "Monetary policy and economic performance of West African Monetary Zone Countries," MPRA Paper 4308, University Library of Munich, Germany.
    2. Chrysost Bangake & Aram Belhadj & Nabil Jedlane, 2007. "Towards Maghreb Monetary Unification: What does the Theory and History Tell Us?," Post-Print halshs-00366756, HAL.
    3. BIKAI, J. Landry & KENKOUO, Guy Albert, 2015. "Analysis and evaluation of the Monetary Policy Transmission Channels in the CEMAC: A SVAR and SPVAR Approaches," MPRA Paper 78227, University Library of Munich, Germany.
    4. Gregory N. Price & Juliet U. Elu, 2014. "Does regional currency integration ameliorate global macroeconomic shocks in sub-Saharan Africa? The case of the 2008-2009 global financial crisis," Journal of Economic Studies, Emerald Group Publishing, vol. 41(5), pages 737-750, September.
    5. Federico Etro, 2004. "The Political Economy of Fiscal and Monetary Unions," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 63(3-4), pages 289-328, December.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission


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