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New Regional Single Currency In West Africa: Is "Eco" The End Of Cfa Franc?

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  • Ay, Ahmet
  • Abdou Baoua, Mahamane Moutari

Abstract

Since the adoption of “ECO” as the name of the West African single Currency by the authorities of ECOWAS in June 2019, some economists and activists started asking questions and making controversial comments on the future of the ECO and the CFA franc. Thus, the main purpose of this study is to investigate the process of creating a new single currency (ECO) that will be implemented by ECOWAS by 2020 and if it can replace the CFA franc of the eight WAEMU countries. To do so, we will examine the economic integration performances of West African countries and the achievement of the four primary convergence criteria set out by the West African Monetary Institute (WAMI) for the implementation of the “ECO”. The study will also examine the current monetary situation of WAEMU countries by providing more information about the CFA Franc. The study concludes that ECOWAS has met about 75% of primary criteria in average. However some countries performance is below the target. That is why much remains to be done regarding the implementation of this single currency. The results also show that the UEMOA countries will agree to join the creation of the ECO currency if and only if it will ensure the same stability that the CFA franc provides for their economies. The study suggests that each country works in the same direction with all the monetary institutions and provide them all the necessary assistances for the achievements of ECOWAS monetary integration and the primary convergence criteria. The study suggests also that the various ECOWAS institutions must harmonize their methodology, their convergence criteria and the statistical computing systems.

Suggested Citation

  • Ay, Ahmet & Abdou Baoua, Mahamane Moutari, 2019. "New Regional Single Currency In West Africa: Is "Eco" The End Of Cfa Franc?," MPRA Paper 125742, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:125742
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    References listed on IDEAS

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    1. Alberto Alesina & Robert J. Barro, 2002. "Currency Unions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 409-436.
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    3. ., 2002. "The theory of currency unions," Chapters, in: The European Monetary Union in a Public Choice Perspective, chapter 4, pages 62-93, Edward Elgar Publishing.
    4. Ogunkola, Olawale, 2005. "An evaluation of the viability of a single monetary zone in ECOWAS," Working Papers 9227354c-57bc-4be1-aa63-4, African Economic Research Consortium.
    5. Robert Barro & Silvana Tenreyro, 2007. "Economic Effects Of Currency Unions," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 1-23, January.
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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
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

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