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Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone; A Comparative Analysis


  • Hazel Selvon
  • Tracy Polius
  • Oral Williams


The paper presents a comparison of the gains from the pooling of reserves, and hence reserve variability, in the Eastern Caribbean Currency Union (ECCU) and the CFA franc zone. The results indicate that countries within the ECCU area have achieved greater balance of payments protection than the CFA zone countries from the pooling of reserves. Unanticipated changes in the terms of trade lowered reserves in the CFA relative to the ECCU, which may reflect a greater reliance on primary commodities in the CFA compared with services in the ECCU.

Suggested Citation

  • Hazel Selvon & Tracy Polius & Oral Williams, 2001. "Reserve Pooling in the Eastern Caribbean Currency Union and the CFA Franc Zone; A Comparative Analysis," IMF Working Papers 01/104, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:01/104

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    References listed on IDEAS

    1. Ernesto Hernández-Catá & C. A. François, 1998. "The West African Economic and Monetary Union; Recent Developments and Policy Issues," IMF Occasional Papers 170, International Monetary Fund.
    2. Oral Williams & Wayne Sandiford & Aldrin Phipps, 1999. "Banana price shocks and adjustment within a unified currency area," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1455-1466.
    3. Paul Cashin & Hong Liang & C. John McDermott, 2000. "How Persistent Are Shocks to World Commodity Prices?," IMF Staff Papers, Palgrave Macmillan, vol. 47(2), pages 1-2.
    4. Ng, Yew-Kwang, 1973. "The Economic Theory of Clubs: Pareto Optimality Conditions," Economica, London School of Economics and Political Science, vol. 40(159), pages 291-298, August.
    5. John F. O. Bilson & Jacob A. Frenkel, 1979. "Dynamic Adjustment and the Demand for International Reserves," NBER Working Papers 0407, National Bureau of Economic Research, Inc.
    6. Seraphin Fouda & David Stasavage, 2000. "The CFA Franc Zone After EMU: Status Quo, Reform, or Dissolution?," The World Economy, Wiley Blackwell, vol. 23(2), pages 221-233, February.
    7. Lizondo, JoseSaul & Mathieson, Donald J., 1987. "The stability of the demand for international reserves," Journal of International Money and Finance, Elsevier, vol. 6(3), pages 251-282, September.
    8. Cashin, Paul & McDermott, C. John & Pattillo, Catherine, 2004. "Terms of trade shocks in Africa: are they short-lived or long-lived?," Journal of Development Economics, Elsevier, vol. 73(2), pages 727-744, April.
    9. Stasavage, David, 1997. "The CFA Franc Zone and Fiscal Discipline," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 6(1), pages 132-167, March.
    10. Hamada, Koichi & Ueda, Kazuo, 1977. "Random Walks and the Theory of the Optimal International Reserves," Economic Journal, Royal Economic Society, vol. 87(348), pages 722-742, December.
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    Cited by:

    1. Titelman Kardonsky, Daniel & Machinea, José Luis, 2007. "Less volatile growth?: the role of regional financial institutions," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    2. Suman Basu & Ran Bi & Prakash Kannan, 2010. "Regional reserve pooling arrangements," Proceedings, Federal Reserve Bank of San Francisco, issue Oct.
    3. Romain M Veyrune, 2007. "Fixed Exchange Rates and the Autonomy of Monetary Policy; The Franc Zone Case," IMF Working Papers 07/34, International Monetary Fund.
    4. Barry Eichengreen, 2007. "Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America?," Open Economies Review, Springer, vol. 18(1), pages 27-52, February.
    5. Ramkishen Rajan & Reza Siregar & Graham Bird, 2003. "Examining the case for Reserve Pooling in East Asia: Empirical Analysis," Centre for International Economic Studies Working Papers 2003-23, University of Adelaide, Centre for International Economic Studies.
    6. repec:wsi:serxxx:v:54:y:2009:i:02:n:s021759080900329x is not listed on IDEAS
    7. International Monetary Fund, 2015. "St. Kitts and Nevis; 2015 Article IV Consultation-First Post-Program Monitoring Program Monitoring Discussions-Press Release; and Staff Report," IMF Staff Country Reports 15/248, International Monetary Fund.
    8. Brahim Razgallah, 2004. "La théorie des ZMO s'applique-t-elle aux pays en développement?," International Finance 0403003, EconWPA.


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