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A new currency for West African states: The theoretical and political conditions of its feasibility

Author

Listed:
  • Massimo Amato

    (Bocconi University, Milan)

  • Kako Nubukpo

    (Universite de Lomo, Togo)

Abstract

Recent developments in the monetary situation in West Africa, in particular the transformation for the CFA franc area and the project to build a single currency for the CEDEAO/ECOWAS, require a systematic review of the assumptions underlying the formation of monetary unions. The article provides a critical review of the traditional theoretical foundations of optimal currency areas (OCAs) and their subsequent amendments, in light of the problems that emerged in the most relevant monetary unions. On specific points, a comparison is made between the eurozone and the CFA zone. The article then investigates the specific characteristics of the monetary area affected by the reform project, and finally it indicates the main lines along which the project of a common currency to all the states that currently make up the CEDEAO/ECOWAS could evolve, identifying four possible alternative roadmaps.

Suggested Citation

  • Massimo Amato & Kako Nubukpo, 2020. "A new currency for West African states: The theoretical and political conditions of its feasibility," PSL Quarterly Review, Economia civile, vol. 73(292), pages 3-26.
    • Handle: RePEc:psl:pslqrr:2020:11
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    References listed on IDEAS

    as
    1. Mongelli, Francesco Paolo & De Grauwe, Paul, 2005. "Endogeneities of optimum currency areas: what brings countries sharing a single currency closer together?," Working Paper Series 468, European Central Bank.
    2. Simwaka, Kisu, 2010. "Choice of exchange rate regimes for African countries: Fixed or Flexible Exchange rate regimes?," MPRA Paper 23129, University Library of Munich, Germany.
    3. Fleming, J Marcus, 1971. "On Exchange Rate Unification," Economic Journal, Royal Economic Society, vol. 81(323), pages 467-488, September.
    4. Krugman, P., 1993. "What Do We Need to Know About the International Monetary System?," Princeton Studies in International Economics 190, International Economics Section, Departement of Economics Princeton University,.
    5. Emerson, Michael & Gros, Daniel & Italianer, Alexander & ,, 1992. "One Market, One Money: An Evaluation of the Potential Benefits and Costs of Forming an Economic and Monetary Union," OUP Catalogue, Oxford University Press, number 9780198773245.
    6. Frankel, Jeffrey A. & Rose, Andrew K., 1997. "Is EMU more justifiable ex post than ex ante?," European Economic Review, Elsevier, vol. 41(3-5), pages 753-760, April.
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    Cited by:

    1. Rodrigue Dossou-Cadja, 2024. "The 1992-93 EMS Crisis and the South: Lessons from the Franc Zone System and the 1994 CFA Franc Devaluation," Working Papers 0246, European Historical Economics Society (EHES).
    2. Abban, Stanley, 2020. "Currency Union as a Panacea for ills in Africa: A New Institutional Framework and Theoretical Consideration," MPRA Paper 105459, University Library of Munich, Germany.
    3. Rodrigue Dossou-Cadja, 2025. "The 1992-93 EMS Crisis and the South: Lessons from the Franc Zone System and the 1994 CFA Franc Devaluation," Working Papers 2025.18, International Network for Economic Research - INFER.

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    Keywords

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    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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