Exchange Rate Arrangements in the Transition to East African Monetary Union
This report considers alternative exchange rate arrangements for EAC countries in the transition to a monetary union.� Four main considerations shape our analysis.� First, while existing exchange rate policies differ in some important ways across the EAC, the Partner States have expressed a desire to achieve a common exchange rate policy during the transition to union.� Second, since the transition period is of uncertain duration, the exchange rate arrangements adopted during the transiton should be consistent with macroeconomic stabilty and financial development on a country-by-country basis.� Third, the exchange rates at which national currencies are converted to the new union-wide currency should be consistent with macroeconomic stability, both in the final run-up to union and in the first few years of union.� Finally, the transition period should be long enough to lay the institutional groundwork for a successful and durable monetary union.
|Date of creation:||24 May 2012|
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