IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/99466.html

Banking Union, Fiscal Union and Political Union as Pathways to Complete and Sustainable Monetary Integration of Africa

Author

Listed:
  • Mogaji, Peter Kehinde

Abstract

Following the monetary integration trends in Europe, there had been the desire for the African Monetary Union and the creation of a unified currency for the African continent. This proposed African common currency would be known as ‘afro’, a single currency for Africa by 2028. The continent of Africa, characterised by the largest number of countries and the largest number of currencies has consequently embarked on a special project for an African monetary integration. The 1991 Abuja treaty set out six stages in the process of achieving a monetary union and a single currency for Africa. This strategy for African monetary integration is based on progressive economic and monetary integration of African economic communities which are regarded as building blocks of Africa. These economic communities are the East African Community (EAC), the Southern African Development Community (SADC) and the Economic Community of the West African States (ECOWAS). Evidences generated from the analyses of the formation of the European Monetary Union (EMU) prompted many conclusions that there were major defects in its establishment as exposed by the Eurozone crisis. Some of these identified optimum currency area (OCA) related design flaws of the Eurozone are: (i) the absence of effective economic governance mechanism; (ii) the retention of banking supervision and resolution at national levels; (iii) the lack of financial back-stops and crisis resolution mechanisms at the union level; and (iv) defects in the design of the Eurozone's common central bank. Clearly, the Eurozone crisis has obviously revealed that banking union and integrated financial market, fiscal union and integrated fiscal framework and political union are all required in a monetary union, for completeness and sustainability. Unfortunately, these are issues not addressed by the OCA theory. From view-points in various debates on the sustainability and completeness of the EMU as well as various revealed faults in the design of Eurozone and the defects inherent in the original optimum currency area (OCA) theory and its application to monetary integration, this paper consequently discusses and highlights banking union, fiscal union and political union as pathways to complete and sustainable monetary integration in Africa.

Suggested Citation

  • Mogaji, Peter Kehinde, 2020. "Banking Union, Fiscal Union and Political Union as Pathways to Complete and Sustainable Monetary Integration of Africa," MPRA Paper 99466, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:99466
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/99466/1/MPRA_paper_99466.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ivo Maes, 2002. "Economic Thought and the Making of European Monetary Union," Books, Edward Elgar Publishing, number 2515.
    2. Paul De Grauwe, 2014. "The Governance of a Fragile Eurozone," World Scientific Book Chapters, in: Exchange Rates and Global Financial Policies, chapter 12, pages 297-320, World Scientific Publishing Co. Pte. Ltd..
    3. Schoenmaker, Dirk, 2013. "Governance of International Banking: The Financial Trilemma," OUP Catalogue, Oxford University Press, number 9780199971596.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hans Geeroms & Pawel Karbownik, 2014. "A Monetary Union requires a Banking Union," Bruges European Economic Policy Briefings 33, European Economic Studies Department, College of Europe.
    2. Mogaji, Peter Kehinde, 2015. "Review of Architectural Flaws of the EMU: What Eurozone Crisis Lessons for the Proposed ‘Afrozone’?," MPRA Paper 99334, University Library of Munich, Germany.
    3. Marta Gómez-Puig & Simón Sosvilla-Rivero & Manish K. Singh, 2018. "“Incorporating creditors' seniority into contingent claim models:Application to peripheral euro area countries”," IREA Working Papers 201803, University of Barcelona, Research Institute of Applied Economics, revised Feb 2018.
    4. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance, 2015. "The QE experience: Worth a try?," Post-Print hal-03459951, HAL.
    5. Dirk Schoenmaker, 2017. "A macro approach to international bank resolution," Bruegel Policy Contributions 21231, Bruegel.
    6. Stavros E. Arvanitis & Theodoros V. Stamatopoulos & Dimitris Terzakis, 2018. "Is There a Non-linear Relationship of Market Value with Cash and Ownership?," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 68(1), pages 3-25, January-M.
    7. Ivo Maes, 2012. "Tommaso Padoa-Schioppa and the origins of the euro," Working Paper Document 222, National Bank of Belgium.
    8. Sasidaran Gopalan & Bhavya Gupta & Ramkishen S. Rajan, 2023. "Financial globalisation in ASEAN+3: Navigating the financial trilemma," Global Policy, London School of Economics and Political Science, vol. 14(3), pages 464-476, June.
    9. Christian Schoder, 2014. "The fundamentals of sovereign debt sustainability: evidence from 15 OECD countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(2), pages 247-271, May.
    10. Anke Hassel, 2014. "Adjustments in the Eurozone: Varieties of Capitalism and the Crisis in Southern Europe," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 6, London School of Economics / European Institute.
    11. Alexandra Ferreira-Lopes & Tiago Neves Sequeira, 2012. "Business Cycles Association in a Small Monetary Union: The Case of Switzerland," Spatial Economic Analysis, Taylor & Francis Journals, vol. 7(1), pages 9-30, March.
    12. Kai Daniel Schmid & Michael Schmidt, 2012. "EMU and the Renaissance of Sovereign Credit Risk Perception," IAW Discussion Papers 87, Institut für Angewandte Wirtschaftsforschung (IAW).
    13. Bartzokas, Anthony & Giacon, Renato & Macchiarelli, Corrado, 2022. "Exogenous shocks and proactive resilience in the EU," MERIT Working Papers 2022-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Pierre‐Richard Agénor & Timothy Jackson & Enisse Kharroubi & Leonardo Gambacorta & Giovanni Lombardo & Luiz A. Pereira Da Silva, 2021. "Assessing the Gains from International Macroprudential Policy Cooperation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(7), pages 1819-1866, October.
    15. CRISTE, Adina, 2012. "Monetary Policy In The Context Of The European Sovereign Debts," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 16(4), pages 23-34.
    16. Andrea Bonilla‐Bolaños, 2021. "A step further in the theory of regional integration: A look at the South American integration strategy," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(5), pages 845-873, July.
    17. Ernst, Ekkehard & Semmler, Willi & Haider, Alexander, 2017. "Debt-deflation, financial market stress and regime change – Evidence from Europe using MRVAR," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 115-139.
    18. Filippo Balestrieri & Mr. Suman S Basu, 2018. "An Imperfect Financial Union With Heterogeneous Regions," IMF Working Papers 2018/205, International Monetary Fund.
    19. De Grauwe, Paul & Foresti, Pasquale, 2016. "Fiscal rules, financial stability and optimal currency areas," Economics Letters, Elsevier, vol. 145(C), pages 278-281.
    20. Della Posta, Pompeo, 2016. "Currency and external debt crises: A unifying framework," Journal of Policy Modeling, Elsevier, vol. 38(4), pages 723-736.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:99466. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.